Nationwide’s £2.9bn takeover of Virgin Money is expected to close in early October
- The acquisition will create a larger company with approximately 24.5 million customers
- Both the PRA and FCA have given their ‘required consent’ for the £2.9bn merger
Nationwide’s takeover of Virgin Money could be completed next month after financial regulators give their approval.
Both the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) have given the “required approval” for the £2.9bn merger, the two lenders announced to investors.
The deal has already received approval from the Competition and Markets Authority and Virgin Money shareholders, including Sir Richard Branson, the company’s largest investor and well-known entrepreneur.
Combination: Nationwide’s takeover of Virgin Money could be completed next month
Branson, who owns a 14.5 percent stake in Virgin Money, is expected to receive £650 million from the takeover.
Many Nationwide members demanded a vote on the deal, but the construction group refused, arguing that the deal was not legally necessary and that it would be impossible to implement in the short term due to its large membership.
However, the takeover still needs to be approved by a court, with a hearing expected to take place on September 27.
If the court agrees, the lenders expect the deal to close on October 1.
“The acquisition does not require any immediate changes to the capital structure of the Virgin Money Group or the combined group as a whole,” the lenders said.
The proposed acquisition, which was agreed in March, will create a larger business with around 24.5 million customers, more than 25,000 employees and total assets of around £366.3 billion.
Nationwide has also pledged to keep all Virgin Money branches open for at least four years and to continue using the Virgin brand name until at least 2030.
In addition, the group’s deputy finance director, Muir Mathieson, has replaced Chris Rhodes as finance director.
Rhodes, who joined Nationwide from Abbey Santander in 2009, will remain on the company’s board until he succeeds David Duffy as CEO of Virgin Money.
Virgin Money was founded in 1995 in partnership with Norwich Union and later renamed Aviva. Since then it has grown to become the UK’s sixth largest retail bank.
In 2011, the company bought Northern Rock for £747m, four years after the Newcastle-based lender was nationalised when it nearly collapsed during the first phase of the credit crunch.
Seven years later, Virgin Money was bought by CYBG, the owner of Clydesdale Bank and Yorkshire Bank, for £1.6 billion.
In the three months to June, the company’s lending fell 0.9 per cent to around £72 billion, but deposits rose 3.8 per cent to £69.8 billion.
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