Nationwide Building Society has agreed to buy Virgin Money in a £2.9 billion deal – but what could this mean for customers with mortgages with the bank?
The deal is expected to result in the creation of a heavy mortgage and savings brand that could rival the big banks.
Nationwide is the third largest lender in Britain, according to data from UK Finance. It is behind Lloyds Banking Group (of which Halifax belongs) and NatWest with £37.8 billion in gross loans on its books in 2022. Virgin Money, meanwhile, was ranked as the seventh largest lender with £10.5 billion in gross loans in 2022.
Graham Cox, director of SEMH Self-Employed Mortgages, said via the Newspage agency: “Nationwide is firing a shot across Halifax’s bow with this acquisition and threatening their status as Britain’s largest mortgage lender by market share.
“The national reach will also increase competition between banks on the high street, which can only be good for consumers given the complacency of some established banks.”
While Nationwide has said it will not dump the Virgin brand initially, it would eventually be phased out over six years once the acquisition is completed.
David Hollingworth, associate director at L&C Mortgages, said: “Borrowers have nothing to worry about and their mortgage will continue as normal.
“In fact, both brands will be around for some time to come, so the market should continue to benefit from differentiated ranges in the short term.”
He added: “Nationwide underlines its position as a mutual sector superpower in acquiring a substantial banking player in the mortgage market.
“The combination will create a new Goliath that will enhance Nationwide’s ability to take on the major banking groups head-on.”
He continued: “Virgin Money has been very competitive in the mortgage market and has shown it is more than capable of competing with the big high street banks. At times, the company has shown an ability to bring a different way of thinking to the market and has tried to innovate in its product options.
“It also has a solid legacy of being able to take a more flexible approach to the right customers to help borrowers who may be a little outside the standard high street offering.
“That expertise will hopefully appeal to Nationwide rather than risk the gradual demise of the more individual approach that can be available through Virgin’s mortgage brand Clydesdale in particular.”