Nationwide takeover of Virgin Money: What the deal means for brands, jobs and branches

Confirmation of the £2.9 billion marriage comes after the two lenders reached a preliminary agreement earlier this month, with Nationwide having spent the past two weeks looking through Virgin Money’s books before making the firm takeover offer. The 220p-a-share offer for Virgin Money, including a planned 2p-per-share dividend pay-out, which will now be voted on by Virgin Money shareholders.

The planned takeover will bring together Britain’s fifth and sixth largest retail lenders, creating a combined group with some 24.5 million customers, more than 25,000 staff and nearly 700 branches. But the move will spell the end of the Virgin Money brand, with Nationwide planning to rebrand the Virgin Money business as Nationwide within six years, although it will keep the two brands initially. Virgin Money had already largely phased out its historic customer-facing Clydesdale Bank and Yorkshire Bank brands since the 2018 deal involving CYBG group and Virgin.

Nationwide said it will keep a branch in each location where the combined group is present, until at least the start of 2028 - announcing that it has extended its branch promise by another two years. The society said it does not intend to make any “material changes” to the size of Virgin Money's 7,300-strong workforce within the first year, but it is assessing the employee needs of the combined group and expects there to be some “limited” impact on back office staff. The groups added: “There may be some limited workforce changes to reduce the size of overlapping central functions relating to Virgin Money ceasing to be a standalone publicly listed company.”

Nationwide also stressed it will remain a mutual building society if the deal is given the nod by Virgin Money’s shareholders.

Debbie Crosbie, Nationwide’s Scots-born chief executive, and the former boss of TSB, said: “This acquisition strengthens Nationwide and means we can offer more value and broader services for our current and future members. More people will experience the benefits of mutual ownership and the customer-focused approach of a building society.”

Virgin Money boss David Duffy said: “The proposed combination with Nationwide presents an exciting opportunity to build on Virgin Money’s significant strategic and operational progress.”

Gary Greenwood, an analyst at brokerage Shore Capital, noted: “Having previously indicated a preliminary agreement had been reached for Nationwide to acquire Virgin Money UK (VMUK), both parties have announced that the agreement has now been recommended by both companies’ boards of directors. By accepting such a low valuation multiple, we think the board of VMUK must have had little faith in its management team to execute on its strategic plan and ultimately deliver a double-digit return on equity and so a higher rating. We expect the deal to complete on the agreed terms.”

Russ Mould, investment director at AJ Bell, added: “You can never rule out someone else throwing their hat into the ring, but Nationwide is looking fairly comfortable for now with getting its offer over the line.”

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