Nationwide building society has finalised a deal to acquire its high-street competitor Virgin Money for nearly £3 billion, marking the largest banking transaction in the UK since the 2008 financial crisis. The two institutions have reached preliminary terms for the takeover, which, pending approval, would result in reduced competition among the major banks. Upon completion, the combined entity would boast £366 billion in total assets, nearly 700 branches, and a customer base exceeding 23 million.
Buying Virgin Money, the UK’s sixth-largest retail bank, would also solidify Nationwide’s position as the second-largest mortgage lender behind Lloyds Banking Group, according to data gathered by the industry body UK Finance on outstanding home loans.
The acquisition by Nationwide marks the latest development in Virgin Money's series of significant deals. Notably, Virgin Money experienced substantial growth following its acquisition of the troubled lender Northern Rock from the government for £747 million in 2011, nearly four years after the latter's nationalisation during the financial crisis.
Subsequently, in 2018, Virgin Money found itself at the centre of another major UK banking transaction when Clydesdale and Yorkshire Banking Group (CYBG) acquired it for £1.7 billion. Despite CYBG's substantial investment to retain the Virgin Money brand, Nationwide's plans indicate that the Virgin Money name will vanish from the high street within six years.
Phasing out the brand could save Nationwide, which is led by the former TSB boss Debbie Crosbie, tens of millions of pounds long term. Virgin Money paid £17m to Virgin Group, which is 100% owned by Sir Richard Branson, for use of the name last year.