Nationwide has completed its takeover of Virgin Money, creating the UK's second-largest mortgage and savings group, and affecting one in three people.
The £2.9 billion deal, announced back in March, will see the two brands initially run as separate entities, with the Virgin Money brand phased out over six years.
It marks the biggest UK bank takeover since the 2008 financial crisis - and also a rare one, given this is a building society acquiring a listed bank.
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In an email to customers last week, Nationwide said: "Nationwide is still a mutual and owned by our members. All of the profits generated by Virgin Money will be retained for the benefit of customers and, for the first time in the UK, a full-service business bank will be part of a large mutual."
Nationwide is known for giving its profits back to its members - like the £100 payment it has made two years in a row - while Virgin Money is known for its investment service and reward points scheme.
They have both launched competitive deals in recent months, such as Nationwide's £175 switching offer, and Virgin's 10% interest current account.
We look at the acquisition in more detail. What does it mean for branches, and also access to the Financial Compensation Services Scheme (FSCS)?
What does the takeover mean for customers?
There are no immediate changes for customers of either bank. However, the Virgin Money brand will eventually be phased out.
The brand will be retained for the “medium term”, but will disappear after six years, by which point it will have been rebranded by Nationwide.
The building society has pledged to not make any material changes to Virgin Money's 7,300-strong workforce "in the near term".
In time, there could be changes to products, such as current accounts, savings accounts and cash ISAs. The future of Virgin Money’s investment service, launched last year, is also unclear.
What does it mean for Nationwide and Virgin Money branches?
The acquisition has created a banking group with 696 branches, second only to Lloyds Banking Group.
Customers will understandably be worried about branches closing, given the hundreds of branches that banks like Barclays, HSBC and NatWest have shut over the past few years. Last month, Lloyds Banking Group said it would close another 55 branches next year.
However, Nationwide chairman Kevin Parry said last week: "I can also confirm that Virgin Money branches are now included in our Branch Promise. This means that everywhere there is a Nationwide or Virgin Money branch, we promise to still be there until at least the start of 2028."
I'm a Nationwide customer - can I do my banking in a Virgin Money branch?
Nationwide customers won't be able to use Virgin Money branches for Nationwide transactions, although the building society said that "over time we expect to broaden the range of services we offer".
Parry said in an email to Nationwide customers: "You will benefit from the Virgin Money expertise in personal lending and credit cards, as well as business banking and accounts for clubs and societies."
How does the takeover affect the FSCS protection?
Customers who have savings with both Nationwide and Virgin Money will continue to benefit from the maximum protection offered by the Financial Services Compensation Scheme (FSCS) on each of their Nationwide and Virgin Money accounts.
The FSCS compensates customers up to £85,000 if the bank or building society they're using goes bust.
The assurance from Nationwide means that if, say, you have £70,000 with Nationwide and £80,000 in a Virgin Money account, and Nationwide went bust, you would receive all your money back, rather than having the total payout capped at £85,000.
Why did Nationwide buy Virgin Money?
Virgin Money struggled last year, with shares trading below levels seen in 2021, and a slump in full-year profit reported in November resulting in a series of downgrades from analysts.
In contrast, Nationwide has enjoyed an earnings boost on the back of stronger net interest margins thanks to higher interest rates.
In a joint statement to the London Stock Exchange in March, Nationwide said the takeover would “deepen its products and services faster than could be achieved organically”.
Virgin Money was Britain’s sixth-largest retail bank by total assets with 6.6 million customers. The acquisition will bolster Nationwide’s mortgage, savings, current account and credit card divisions, as well as broaden its business banking offering.
What’s the difference between a building society and a bank?
The main difference between a bank and a building society is that building societies are owned and run by their members – in other words, the people who bank, save and borrow with them.
A listed bank is floated on the stock market, so is owned by its shareholders.
Building societies sometimes offer better interest rates than banks. On the other hand, banks may be more digitally-focused and have a larger product range.
The stock market statement back in March acknowledged that Virgin Money had an ambition of becoming the UK's best digital bank.
If you’re a Nationwide customer and wondering if the Fairer Share scheme will continue, which saw eligible members receive a £100 bonus last year, chairman Kevin Parry said the deal would “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."
