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Will the UK watchdog approve the Nationwide – Virgin Money merger?

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The UK competition watchdog, the Competition and Markets Authority, said Friday that it has officially launched an investigation into the proposed merger of Nationwide LON:NBS with Virgin Money LON:VMUK, a move that will very likely focus on the mortgage and savings portfolios of the two banks.

The proposed £2.9 billion merger will not challenge the dominance of the UK’s big four banks Barclays LON:BARC, Lloyds LON:LLOY, HSBC LON:HSBA and NatWest LON:NWG in most sectors other than in mortgage lending.

Even a very rough look at the numbers shows that any of the big four dwarfs the size of the Nationwide – Virgin Money combo, primarily because neither Nationwide nor Virgin boast a business banking division, a sector that propels the big four into a league of their own.

Similarly, in terms of customer numbers the contender, which will eventually abandon Virgin Money’s name and keep the Nationwide brand, will bring together 17 million customers from Nationwide’s side and another 6.6 million from Virgin Money, significantly below Barclay’s 48 million customers.

But the merger, if approved, will create the second-largest mortgage and savings provider in the UK. Nationwide is already the UK’s second largest mortgage lender with a mortgage book of £200bn to which it could add Virgin Money’s £57.5bn.

In £ Market Cap Total Assets at end 2023 Revenue Net Income Share price YTD
Barclays 32.78bn 1.47tr 25.4bn 5.3bn +41.65
Lloyds 34.95bn 881tr 13.7bn 17.9bn +15.5
HSBC 130.1bn 3.04tr 30.3bn 24bn +10.1
Nationwide 1.37bn 272bn 4.45bn 1.77bn +1.2
Virgin Money 2.76bn 91.8bn 1.7bn 345m -3.02 pre offer

Nationwide’s change of direction

While it is still maintaining its building society structure and will continue to do so even after the merger, Nationwide has already lost its warm and fuzzy user-friendly image since the arrival of new chief executive Debbie Crosbie in 2021 who has opted for a much more market-oriented direction. This was either good or bad, depending on if you were the bank’s customer or shareholder. For instance, Nationwide’s overdraft interest rate was bumped up to 39.9%, significantly higher than its peers and very comfortably above the UK’s interest rate of 5.25%.


Crosbie is an experienced mid-sized bank exec and no stranger to mergers and acquisitions. She is a former executive of CYBG, the bank created through the merger of Yorkshire Bank and Clydesdale Bank, which later bought the then Virgin Money and adopted the Virgin brand name over CYBG.

Judging from the changes in the last two years Crosbie is likely to continue steering Nationwide in a more aggressive way than before towards shareholder value. This is already visible from the offer Nationwide put on the table for Virgin Money.

The £2.9 billion offered, and accepted by Virgin Money shareholders, was 38% above Virgin Money’s share value at the time but it was also significantly below the bank’s book value. Shareholders accepted the bid even though it represented only around 61% of Virgin Money’s book value because shares languished in a 10% range for the better part of 12 months before the offer, and any moves higher never managed to sustain momentum.

The CMA will start its investigation on 3 June with a decision on whether it needs to escalate it due to be made by 26 July. If approved, the merger should be concluded in the fourth quarter of 2024.

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