It was a little overlooked because of the Budget, but last week there was an announcement that Nationwide Building Society has reached an agreement to acquire Virgin Money, in a £2.9 billion deal. If the deal were to go ahead, it means that the collaboration would create the UK’s second largest mortgage and savings group, after Lloyds.
If the deal goes ahead it would be the biggest UK bank takeover since Northern Rock Bank was bought, ironically, by Virgin Money in 2012. Virgin was itself bought by Clydesdale and Yorkshire Bank in 2018.
However, Nationwide has said that it would make no material change to Virgin Money’s employees “in the near term”.
In terms of what it might mean for savers, it’s simply too soon to say. But some people will be concerned about how this move will affect the Financial Services Compensation Scheme (FSCS) protection, especially for those who already have money with both Nationwide and Virgin Money.
Well Nationwide has confirmed that if the deal goes ahead, the two brands will operate under two separate licences, so there would be no change to the protection, at least immediately. Over time however, it’s likely that the Virgin brand will cease and there may be a point at which one of the banking licences is dropped. But that will be some way down the line and what we have seen in the past, with other bank mergers, is that there has been plenty of notice, to give customers time to ensure they can keep their funds protected.
Nationwide has also confirmed that it will stay committed to its Branch Promise, which means that everywhere they have a branch, they promise it’ll still be there until at least the start of 2026.
We’ll also have to wait and see what it will mean for savings rates – we’ll keep our eyes open, but it would be a shame to see Virgin Money disappear from our best buy tables.
Nationwide has snapped up a number of building societies in the past, including Dunfermline, Derbyshire and Cheshire, but this would be by far its biggest deal. As a result some of Nationwide’s members are demanding a vote on the outcome.
However, Nationwide has insisted that no member vote is needed, under the 1985 Building Societies Act. Instead, it will be writing to all members in the next few weeks to outline the benefits.
We’ll keep an eye out for any more news and let you know how things progress. In the meantime, there’s nothing to stop you from opening accounts with either provider.
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