Nationwide Building Society has reached a “preliminary agreement” to acquire Virgin Money UK for £2.9bn.
While there is a long way to go before any such deal is completed, the proposed move would create one of the UK’s largest mortgage and savings groups.
Virgin Money is registered in Newcastle and also has operations in Glasgow, and Nationwide today said that it “valued” the company’s “ongoing presence” in the two cities.
In a joint statement, the two companies stated that the combined group would have total assets of approximately £366.3bn and total lending and advances of approximately £283.5bn.
“A combination with Virgin Money would accelerate Nationwide’s strategy and create a stronger, and more diverse, modern mutual,” explained Kevin Parry, Chairman of Nationwide Building Society.
“The combination would increase Nationwide’s scale and financial strength, put us in a stronger position to continue to provide Fairer Share Payments to eligible Nationwide members, and offer rates for mortgages and savings that are, on average, better than the market average.”
The plan would be to integrate Virgin Money “over multiple years” into the Nationwide group. In the medium term that would mean it would retain the Virgin Money brand, but under an agreement with Virgin Enterprises, this would be phased out over a 6 year period.
“The Board of Virgin Money is pleased that Nationwide recognises the considerable strengths and opportunities that exist across our business, with the potential acquisition delivering attractive value for our shareholders. We are confident that a combination would support an exciting new chapter for Virgin Money to benefit from Nationwide’s scale and ambition,” said David Bennett. Chairman of Virgin Money UK PLC.
When it comes to jobs – and Virgin Money employs 7300 full-time staff, Nationwide said it “does not intend to make any material changes to the size of the Virgin Money employee base in the near term, and would safeguard the existing contractual and statutory rights of Virgin Money employees, including pension arrangements and redundancy policies.”
“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,” stated Debbie Crosbie Chief Executive Officer of Nationwide Building Society.
“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.”
