Nationwide extends branch promise – including Virgin Money

Nationwide confirmed it will extend its branch promise for another two years, which will include Virgin Money if the near-£3bn deal goes ahead.

Debbie Crosbie, chief executive, announced it is extending its “unique” branch promise “until at least the start of 2028”.

Nationwide currently has just over 600 bank branches, and as part of its re-brand in October last year, it promised not to leave any town or city in which it is based until at least 2026.

Today’s two-year extension to this promise also includes Virgin Money.

Earlier this month, the financial giants announced they were in talks for the mutual to buy Virgin Money for a consideration of £2.9bn.

At the time, Nationwide said it was “committed to maintaining its breadth of coverage” and would keep its branch promise. Further, from completion of the deal, it intended to retain a branch everywhere where the combined group is present until at least the start of 2026.

It added that it values Virgin Money’s ongoing presence in Glasgow and Newcastle.

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.”

Virgin Money currently has 91 bank branches, after announcing 40 were to close in 2023.

TERMS OF THE NATIONWIDE AND VIRGIN MONEY DEAL

Today’s update noted that the boards of both brands believe the acquisition will “combine two complementary businesses, creating the second-largest provider of mortgages and savings in the UK”.

The statement noted that Nationwide had grown over time through a “series of historical acquisitions” and was the country’s largest building society, and it was “wholly committed” to being a building society.

The statement suggested the combined group would have “enhanced financial strength” through greater diversity of funding, especially from business deposits, and an “opportunity to generate improved returns”.

Nationwide confirmed it would continue its provision of ‘Fairer Share Payments’ to eligible Nationwide members and member financial benefits via mortgage and savings rates.

It added that Virgin Money will rebrand over time.

The brand licence agreement will terminate automatically on the fourth anniversary of completion, and then Virgin Money will have a two-year period to rebrand.

Nationwide has also entered into an exclusivity agreement with Virgin Red, so it will engage in discussions for a six-month period after completion to expire a potential partnership relating to the growth of Virgin Red loyalty programme to all customers.

The independent Virgin Money directors intend to recommend the deal unanimously to shareholders. It does not require a Nationwide member vote.

The acquisition is expected to complete in Q4 2024, subject to certain conditions, the statement added.

Nationwide will offer 220 pence in cash for each Virgin Money share, which comprises 218 pence per Virgin Money share in cash consideration and a proposed dividend of two pence per Virgin Money share to be paid at the end of this financial year.

This equates to £2.9bn on a fully diluted basis and represents a premium of 38% to the closing price of 159.1 pence per Virgin Money share on 6 March.

Kevin Parry, chair of Nationwide Building Society, said that after “full consideration and the appropriate due diligence”, and accounting for comments from members, the board’s assessment of the acquisition offer for Virgin Money was in the “best interests of the society and its present and future members”