Nationwide’s takeover of Virgin Money will create UK’s second largest mortgage and savings provider
Nationwide Building Society and Virgin Money UK say they have reached preliminary agreement on a potential cash acquisition of Virgin Money by Nationwide.
This potential acquisition would create a combined group with total assets of around £366.3bn and total lending and advances of approximately £283.5bn, representing the second largest provider of mortgages and savings in the UK.
Nationwide, which is based in Swindon and is the UK’s largest building society, says it does not intend to make any changes to the size of Virgin Money’s 7,300-strong full time workforce in the near term, and would safeguard the existing contractual and statutory rights of Virgin Money employees.
Virgin Money is the UK’s sixth largest retail bank by total assets with a customer base of approximately 6.6 million and total lending of £72.8bn, comprising a mortgage portfolio of approximately £57.1bn and deposit portfolio of about £67.3bn.
An acquisition would enable Nationwide to increase its scale in its core lending and deposit markets and strengthen its position as one of the UK’s leading providers of mortgages, savings and current accounts.
Virgin Money has a strong unsecured lending business, with £6.7bn of balances, including an estimated 8.6% market share of UK credit cards, which the Nationwide Board believes would complement Nationwide’s existing product offering and unsecured lending.
Also, The Nationwide Board believes Virgin Money’s £9bn of existing business lending balances and ‘Business Current Account’ would enable Nationwide to build on its existing business savings proposition, with a broader business banking offering to support its growth and diversify its sources of funding.
Nationwide explains that it would seek to integrate Virgin Money gradually over multiple years into the Nationwide group. But Virgin Money customers would not automatically become members of Nationwide.
Chief executive officer of Nationwide Building Society, Debbie Crosbie, said: “Importantly, Nationwide will remain a building society, and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK, including our continuing commitment to retain existing branches, as part of our ‘Branch Promise’ and leading levels of customer service.
“We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future.”
Chief executive officer of Virgin Money UK PLC, David Duffy, added: “This potential transaction with Nationwide represents an exciting opportunity to build on the significant progress we have made in becoming the only new Tier 1 bank in recent history.
“The combined scale and strength would expand our customer offering and complete our journey in the banking sector as a national competitor.”
