The Nationwide Building Society has agreed to purchase Virgin Money in a £2.9 billion deal – a uncommon instance of a mutual taking on a listed financial institution.
Nationwide’s members don’t must formally agree the transfer however Virgin’s shareholders must again the plan.
The deal would create one of many UK’s largest mortgage and financial savings teams: all of Virgin Money’s 7,300 staff would “within the close to time period” however the Virgin Money model will likely be phased out over six years as soon as the proposed takeover is accomplished.
Virgin Money is the UK’s sixth largest retail financial institution with round 6.6 million clients and 91 branches. Nationwide will preserve a department in every location the place the 2 businesses are current till no less than 2026.
The 220p-a-share worth supplied by Nationwide is 38 per cent increased than Virgin Money’s closing share worth on the time of the supply and firstly of the weekend the financial institution stated it was “minded to advocate it” to shareholders.
Nationwide is thought to need to bolster and diversify streams of funding, faucet into business deposits, and lengthen its providers. After completion of the proposed takeover, Nationwide can be value round £366 billion with complete lending and advances of about £283 billion.
Reaction inside the business has been supportive.
The chief govt of My Community Finance, Tobias Gruber, says: “While Nationwide has long been associated with security and safety, in recent times we’ve seen it reinvent itself, underscored by a recent brand refresh. As disruptors like Monzo and Revolut reshape the banking landscape, established banks have been sluggish to adapt. In contrast, Nationwide appears to have emerged from the shadows, seizing the opportunity to lead the charge in confronting the digital challenger banks head-on.”
Susannah Streeter, head of money and markets at Hargreaves Lansdown, feedback: “The Virgin Money board is minded to accept the deal, which … may not be surprising given the difficulties faced by the company over the last year amid swirling cost-of-living pressures increasing credit card arrears. There will be some hand-wringing again over yet another listed company leaving the London Stock Exchange. Valuations are weak, weighed down by the highly sluggish economy, and to some extent the lingering effects of Brexit.”
