Nationwide offer to buy Virgin Money
Published on: 21 March 2024
A message from our Chairman
I wrote to you earlier this month to say that the Board of Nationwide was considering making an offer to buy Virgin Money. I said I would provide you with more information once a decision had been made.
I am now pleased to confirm that Nationwide’s Board has carefully, and fully, considered this proposal. We have taken the comments received from members into account and examined thoroughly the information provided by Virgin Money.
The Board believes the acquisition offers compelling benefits for Nationwide’s current and future members. Accordingly, it has made a binding offer that Virgin Money’s directors intend to recommend be accepted by their shareholders. You can find full details of the offer and answers to key questions you may have.
This acquisition will strengthen Nationwide financially and presents an opportunity to accelerate our strategy. It delivers greater value for our members and broadens the range of services we offer to include those that many members have requested.
- Acquiring the Virgin Money business will create a financially stronger building society with a larger customer and deposit base. We expect to use this financial strength to support the continued provision of savings and lending rates for members in the future that are, on average, better than across the market in general.
- Nationwide will acquire a strong personal lending business and credit card range.
- For a while, we have considered how to extend the benefit of our mutual model to include business banking. This acquisition will bring the established business banking services of Virgin Money within the Nationwide Group. In the long term, we would make these, and accounts for clubs and charities, available to our members.
- As a result of the acquisition, we will increase the size of the Group’s branch network. We will also extend our Branch Promise by two years, meaning that everywhere we have a Nationwide branch, we promise to still be there until at least the start of 2028.
The Board remains wholly committed to remaining a building society and a modern mutual that meets more of its customers’ and members’ banking needs. All customers will become part of a combined group with a clear focus on providing simply brilliant service to its customers.
Last year Nationwide was able to make its first Fairer Share Payment to eligible members. We expect that a financially stronger combined Group would make future payments more likely, but these would only be to eligible Nationwide members and not to Virgin Money customers.
The integration of the two businesses would be undertaken carefully over several years, and it will be designed to avoid disrupting services or customers.
The Board believes that the benefits that this acquisition will bring to our current and future members are substantial and could not be delivered by Nationwide on its own.
We will keep you updated on progress through our News hub and in our regular newsletter. You can sign up to receive the newsletter, by updating your preferences.
As ever, we will continue to focus on delivering our Purpose: Banking – but fairer, more rewarding and for the good of society.
Thank you for being a member.
Yours sincerely,
Kevin Parry
Chairman
Answers to key questions
We have now confirmed our offer for Virgin Money. Virgin Money’s Board has accepted the terms of the offer and intends to recommend it to Virgin Money shareholders.
We will keep you updated on progress through our News hub and in our regular newsletter. You can sign up to receive the newsletter, by updating your preferences.
We expect the acquisition to increase Nationwide’s financial strength. This will give us an opportunity to accelerate our strategy and broaden and deepen our products and services faster than could be achieved organically, whilst providing a return that will deliver greater value to our customers and members.
We are and will remain a building society. This proposed purchase does not change that. We believe it will help us strengthen the Society and extend the benefits of mutuality to many more people in the UK.
By becoming a larger and financially stronger organisation, we will over time be able to offer a wider range of products to members, like banking for businesses, clubs and charities.
At the same time, we will continue to focus on providing great value and leading customer service.
We are also extending our unique Branch Promise by another two years. Everywhere we have a branch, we promise to still be there until at least the start of 2028 (excluding factors beyond our control).
The improved financial value we expect this deal to generate will, we believe, support the provision of member financial benefits via mortgage and savings rates that are, on average, better than the market average, along with other incentives.
The Nationwide Fairer Share Payment is our way of rewarding those members who choose us for their everyday banking as well as having their mortgage or savings with us. They are trusting us to help them with their day-to-day financial needs. Our Fairer Share Payment rewards them for that choice.
We believe bringing Nationwide together with Virgin Money will strengthen our financial position. This improved financial strength will make it easier for us to continue to reward eligible members through our Fairer Share Payment.
While we want the Fairer Share Payment to be a yearly event, we will only make it if we have enough financial strength.
We know branches are important to our customers, so we are extending our unique Branch Promise by another two years. Everywhere we have a branch, we promise to still be there until at least the start of 2028 (excluding factors beyond our control).
If we successfully buy Virgin Money, and following the completion of any branch closure plans ongoing as at that time, we intend to keep all remaining Virgin Money branches open until at least the start of 2028, demonstrating the difference a mutual can make.
Nationwide’s Board believes our proposed purchase of Virgin Money will strengthen Nationwide financially and deliver greater value for our current and future members. That is in the interests of all our members.
The requirement to hold a vote is governed by the Building Societies Act 1986. The Board has considered this, and having taken appropriate advice, it has decided a member vote is not required.
This proposed purchase has no effect on the protection you receive from the Financial Services Compensation Scheme (FSCS) PDF 940KB, (opens in a new window). If and when Virgin Money becomes part of Nationwide, we will operate under two separate banking licences.
The FSCS automatically protects your personal savings up to £85,000. If you have £85,000 with us and £85,000 with Virgin Money, £170,000 of your savings will be covered.
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