Nationwide invests money in Virgin Money to upgrade its customer service and IT systems
Nationwide has warned it needs to invest money to bring Virgin Money’s customer service and IT systems up to standard.
Britain’s largest building society, with 16 million members, is buying the listed lender for £2.9 billion.
The deal – the biggest in the UK banking sector since the financial crisis – has been criticised by some members after they were denied a vote on the plan.
Takeover: Nationwide, led by CEO Debbie Crosbie (pictured), is buying listed lender Virgin Money for £2.9bn
Nationwide says the acquisition will give it access to business banking, cheaper financing and the lender’s profits.
The company plans to run Virgin Money as a separate brand for at least four years, paying tycoon and majority shareholder Sir Richard Branson at least £76 million as it gradually integrates the two lenders.
But the association, led by chief executive Debbie Crosbie, declined to disclose the cost of merging the two companies.
Members yesterday challenged Nationwide to justify the deal, which would create the second-largest savings and loans group after Lloyds.
Virgin Money joined forces with Clydesdale Bank and Yorkshire Bank in 2018.
“We need a reasonable period of time to invest in (Virgin Money) customer service and integration,” Chief Financial Officer Chris Rhodes told the online-only annual meeting.
“There are challenges,” he added. “The integration of Virgin Money and Clydesdale is not as complete as we would like.”
The news will raise eyebrows among some members, as Crosbie’s knowledge of Virgin Money and her leadership was intended to make the deal less risky.
Crosbie worked at Clydesdale for 22 years, most recently as acting CEO, but left in 2019 after the company merged with Virgin Money and she lost her top role.
She said the risks and opportunities of the takeover had been considered “very carefully”.
Nationwide was “confident” it would reap more than just the cost of the integration, she said.
She declined to comment on the decision, reported by The Mail on Sunday, to close the account of Mikael Armstrong, who led the fight to give members a say in the Virgin deal. She said: ‘We would never empty someone’s bank account because of their legal views.’
Fewer than 300 people attended the event, less than half the number who attended in person 20 years ago, one member said.
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