There are no plans for further major acquisitions after the £2.9 billion deal with Virgin Money

Thursday May 23, 2024 10:36 am

Debbie Crosbie joined Nationwide from TSB in June 2022

Nationwide’s chief executive said the lender is not currently considering any major acquisitions and that Britain’s largest building society is already busy enough with completing its £2.9 billion takeover of Virgin Money.

said Debbie Crosbie, who joined Nationwide in June 2022 City AM in a telephone interview on Thursday, he confirmed that the lender was focused on making the most of its relationship with the UK’s sixth-largest major bank.

“I think we will focus primarily on what we have on our mind at the moment. We have no other plans for major acquisitions,” Crosbie said. “Virgin Money gives us both the strength in our core markets and the depth we really need to compete.”

The deal shocked the city when it was first proposed in March and is the country’s largest banking merger since the financial crisis.

This is expected to mark Nationwide’s entry into the riskier business banking market as it seeks to scale and diversify away from interest rate-sensitive savings and mortgages.

Crosbie added: “I think our focus will be on getting the most out of this acquisition, really improving the customer experience across Virgin Money and Nationwide and delivering the benefits of this transaction before we even start thinking about anything else in the future. “

The deal comes at a time of increasing consolidation in the UK’s mid-market banking sector, with lenders such as Nationwide recently beginning to rapidly target smaller rivals struggling with cost pressures and a lack of scale compared to the biggest banks.

Coventry Building Society is working on putting the finishing touches on its £780m takeover of The Cooperative Bank, with an announcement expected in the coming days, and Barclays entered into a deal to buy the majority of Tesco Bank in February.

Nationwide was recently floated as a potential bidder for TSB Bank if it ultimately goes up for sale under a new parent company.

The bank’s Spanish owner, Sabadell, is currently facing a hostile takeover attempt by its larger domestic rival BBVA, which some analysts say has a good chance of success. TSB is considered an undesirable asset for BBVA as it has a much smaller presence in the UK than Sabadell.

Crosbie herself served as TSB president from 2019-2022. Asked whether Nationwide would consider the offer, she did not comment directly on the matter.

Yesterday, the latter’s shareholders approved Nationwide’s takeover of Virgin Money. The transaction is expected to close in the fourth quarter of this year, subject to regulatory approval.

The society said today it could gain as much as £1.5 billion from the takeover, but final figures may vary.

“One of the great things about being a mutual is that we don’t have to split the profits,” Crosbie added. “The market consensus for profits achieved by Virgin Money is just under £500 million – this year it will be £480 million. This is an example of the type of money we will be able to keep in Virgin Money and reinvest.”

The news comes after Nationwide announced another year of record profits thanks to higher interest rates and plans to transfer a total of around £385 million directly into their accounts to eligible customers next month.