Leading UK building society Nationwide has reached an agreement to acquire Virgin Money in a major £2.9bn (US$3.72bn) deal.
The acquisition will eventually see Virgin Money disappear altogether as Nationwide gradually absorbs the financial arm of Sir Richard Branson’s Virgin Group empire.
Once the deal is cleared, it will make Nationwide the UK’s second-largest mortgage and saving group.
Nationwide: Scaling digital services with Virgin acquisition
Although the deal is now agreed, Nationwide will not make any material changes to Virgin Money in the near term, bringing some relief to its 7,300 employees.
Despite initially claiming it would keep using the Virgin Money brand, Nationwide now plans to phase out the brand over the next six years once the proposed takeover is complete.
Indeed, should Nationwide’s deal to acquire Virgin Money be cleared, it will eclipse the biggest UK bank takeover since the collapse of Northern Rock in 2008, which was itself purchased by Virgin Money in 2012.
The deal would also be bigger than Barclays’ recent acquisition agreement with Tesco Bank, which was signed for US$757m.
Today, Nationwide is the UK’s biggest building society with close to 18 million customers, whereas Virgin Money has 6.6 million customers under its wing.
Combined, the deal will create a group with 696 branches across the UK, making Lloyds Banking Group the only institution with a bigger in-person presence across the country.
Unlike most incumbent banking institutions which are gradually receding from towns and cities, Nationwide, as a building society, has pledged to keep a branch in each location where the two businesses are present until at least 2026.
For Nationwide, the deal provides access to Virgin Money’s digital capabilities and allows the building society to offer more products and services to customers, broadening the relationship Nationwide has with its members.
Nationwide CEO Debbie Crosbie, adds: “[The deal] would bring the benefits of fairer banking and mutual ownership to more people in the UK.”
This includes rates on mortgages and savings that are better than the UK’s market average.