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Nationwide Chairman Kevin Parry has confirmed a planned £2.9bn takeover of Virgin Money in a significant expansion of the company’s omnichannel banking presence.

A potential takeover of Virgin Money by Nationwide, one of the UK’s biggest building societies, was first outlined by Parry earlier this month. The financial institution  revealed that it has agreed a proposal of 220 pence for each Virgin Money share with the latter’s board.

The statement released today (22 March) outlined that Nationwide and Virgin Money see each other as complementary businesses. The duo’s merger plans will create the ‘second largest provider of mortgages and savings in the UK’, the statement said.

Parry remarked: “Following full consideration and the appropriate due diligence, and after taking comments from members into account, the Board of Nationwide’s assessment is that the binding offer to acquire Virgin Money is in the best interests of the Society and its present and future members.”

Virgin Money’s board is in favour of the takeover, believing the move to be the best direction for the business. However, approval will still be required from a majority of Virgin Money shareholders.

The company is the trading name of an independent UK banking and financial services firm which licences its brand identity from Richard Branson’s Virgin Group, established by the British businessman back in the 1990s as Virgin Direct.

David Duffy, Virgin Money CEO, commented: “The proposed combination with Nationwide presents an exciting opportunity to build on Virgin Money’s significant strategic and operational progress, including the consistent growth in our retail and business customers, deposits and target lending. 

“Together the combined group can offer more great products and services to a larger customer base.”

Specifics of the transaction have seen Nationwide and Virgin Red, the Virgin Money loyalty scheme, sign an agreement for the continuation of the offering via a potential partnership to customers of the new Nationwide-Virgin Money group.

In its statement, Nationwide reiterated a rationale for the acquisition, outlined by Parry, in his initial confirmation of the bid a few weeks ago, this being that the company has grown significantly through challenges throughout its 140 year history.

The takeover of Virgin Money falls in line with Nationwide’s historic strategy, the group explained. Nationwide believes that the takeover will support its continued provision of savings and lending rates and substantially expand its retail branch network.

Regarding this latter point, the company has reiterated its ‘Branch Commitment’ – a pledge to keep all branches open until at least 2028 – and continue investing in said branches. 

This is in contrast to much of the UK retail banking sector which has seen a number of closures over the past year, although interestingly, Nationwide has observed an upsurge in cash withdrawals from its branches.

Nationwide CEO, Debbie Crosbie, 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. This includes Nationwide’s unique Branch Promise, which we are extending until at least the start of 2028. The Promise will also apply to Virgin Money branches.”