High street lender Virgin Money agrees a £2.9bn proposed takeover by Nationwide Building Society

The companies said they had reached a preliminary agreement on the deal, with Nationwide now looking through Virgin Money’s books before making a firm offer.

The planned tie-up would create a combined lender worth around £366.3bn, with total lending and advances of about £283.5bn.

Nationwide said it does not intend to make any material changes to the size of Virgin Money’s 7,300-strong workforce “in the near term”.

Nationwide also stressed it will remain a mutual building society if the deal goes ahead.

Debbie Crosbie, chief executive of Nationwide Building Society, said: “Importantly, Nationwide will remain a building society, and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK, including our continuing commitment to retain existing branches as part of our Branch Promise, and leading levels of customer service.

“We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future.”

Virgin Money said the planned deal comes after a series of proposals from Nationwide and that, if a firm offer is made on the same terms as those so far agreed, its board would “be minded to recommend it to Virgin Money shareholders”.

It said it would benefit from Nationwide’s “scale and pace of investment”.

Virgin Money chief executive David Duffy said: “This potential transaction with Nationwide represents an exciting opportunity to build on the significant progress we have made in becoming the only new Tier 1 bank in recent history.

“The combined scale and strength would expand our customer offering and complete our journey in the banking sector as a national competitor.”

Virgin Money was formerly the Clydesdale and Yorkshire Bank group CYBG and rebranded after a £1.6bn takeover of Sir Richard Branson’s banking group in 2018.

CYBG was formed in 2016 after previous owner National Australia Bank divested its UK operations.

Chairman of Nationwide Building Society, Kevin Parry commented: “A combination with Virgin Money would accelerate Nationwide’s strategy and create a stronger, and more diverse, modern mutual.

"The combination would increase Nationwide’s scale and financial strength, put us in a stronger position to continue to provide Fairer Share Payments to eligible Nationwide members, and offer rates for mortgages and savings that are, on average, better than the market average.”