Nationwide gains £2.3bn from Virgin Money takeover

Swindon’s Nationwide Building Society said it has gained £2.3bn since buying rival bank Virgin Money – the UK’s biggest banking merger since the financial crisis.

The building society said the value of Virgin Money, which it acquired in October, was well above the £2.8bn takeover price.

Nationwide’s chief executive Debbie Crosbie said that future profits generated by Virgin Money would now be used for the benefit of customers, rather than being paid to external shareholders.

However, the building society reported a sharp drop in profits for the latest half-year period.

Its statutory pre-tax profit fell to £568m for the six months to the end of September, from £989m a year ago.

The group said this reflected its Fairer Share Payment to eligible members in June, and lower borrowing costs.

Crosbie said: “The economic outlook remains uncertain, and the interest rate outlook means we expect to have passed peak profitability.

“However, lower interest rates and resilience in real earnings are supporting consumer finances which, if maintained, should support a strengthening in housing market activity and overall deposit growth.”

Virgin Money posted higher profits as a result of cost cutting measures.

Its statutory pre-tax profit rose to £558m for the year to the end of September from £345m.

Virgin Money’s restructuring plans were put on hold after agreeing to be bought by Nationwide but it still made cost savings of £187m over the past year.