Nationwide to buy Virgin Money for £2.9bn

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Nationwide Building Society has announced a £2.9bn deal to acquire Virgin Money, two weeks after the companies agreed the initial terms of a tie-up designed to challenge the dominance of Britain’s biggest banks.

The purchase, which would catapult Nationwide into business banking and increase its share of the mortgage market, is Debbie Crosbie’s boldest move since taking over as chief executive of the mutual in 2022.

Under the terms of the transaction, Nationwide will pay 218p in cash for each share of Virgin Money and a final dividend of 2p, the companies said on Thursday.

Nationwide, which has 18,000 employees, said the combined group would have assets of about £366bn. Nationwide also confirmed it would eventually phase out the Virgin Money brand.

Co-founded as Virgin Direct by Jayne-Anne Gadhia in 1995, Virgin Money was bought by Clydesdale & Yorkshire Banking Group for £1.7bn in 2018 in a deal that kept the Virgin brand.

“This acquisition strengthens Nationwide and means we can offer more value and broader services for our current and future members,” Crosbie said in a statement.

The acquisition price is a 38 per cent premium to where Virgin Money’s stock was trading before the outline of the deal was announced this month.

Virgin Money has struggled over the past 12 months and last year increased its provision for bad loans. In recent years, its performance has been blighted by higher than expected compensation payouts linked to mis-sold payment protection insurance.

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

Crosbie and Duffy have worked together previously. When Duffy joined as head of CYBG in 2015, Crosbie was chief operating officer, a role she held for four years until she left to run TSB Bank.

This post was originally published on Financial Times