Nationwide is considering a buyout of Virgin Money in pursuit of a more diverse financial and banking offering according to the building society’s Chairman, Kevin Perry.
In an open letter published on Nationwide’s website, Perry announced ‘we are considering making an offer to acquire Virgin Money’ as part of a continuation of the group’s 140 year commercial tradition of acquiring and integrating various companies.
“We believe a combined group of Nationwide and Virgin Money would accelerate our existing strategy and create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future,” Perry explained.
Virgin Money is the trading name of an independent UK banking and financial services firm which licences its brand identity from Richard Branson’s Virgin Group, having been established by the businessman back in the 1990s as Virgin Direct.
The firm has itself expanded greatly over the years via acquisition, having started off as an online platform before expanding into retail banking through its takeover of Northern Rock in 2011, then a nationalised enterprise following the fallout of the 2007-08 financial crisis.
Acquiring Virgin Money would mark a significant expansion of Nationwide’s banking operations in both the retail and online space – the former may be of greatest significance to Nationwide, with the bank one of the few in the UK to be reporting increased demand for cash withdrawal services.
The takeover would also include other ventures such as Virgin Money Investments, which the firm recently secured full control of by buying out abrdn’s 50% stake. However, Perry asserted that “Nationwide will remain a building society”.
“The combination of our businesses would put us in a stronger position to continue to provide Fairer Share Payments to our eligible Nationwide members, better value mortgages and savings, and leading customer service,” his statement outlined.
“Over time, we would aim to provide a wider range of products and services to our customers and members, including Virgin Money’s well-established business banking services.
“A combined group would deliver the benefits of fairer banking and mutual ownership to more people in the UK. Nationwide remains wholly committed to being a modern mutual that can meet all its members’ banking needs.”
In his online statement, Perry also noted that ‘there is no guarantee that we will make a firm offer, nor that it would be accepted by Virgin Money’s shareholders’, suggesting that a deal has not yet been reached.
However, UK media have been reporting that an agreement between the two has been reached and that a merger is on the horizon. The Guardian, for example, has reported that Nationwide will purchase Virgin Money for £2.9bn.
The paper also quoted Virgin Money Chair, David Bennett, as saying: “The board of Virgin Money is pleased that Nationwide recognises the considerable strengths and opportunities that exist across our business, with the potential acquisition delivering attractive value for our shareholders.”
