Acquisition of Virgin Money by Nationwide finalized - implications for clients elaborated
Nationwide Building Society, one of the UK's largest building societies, has announced its acquisition of Virgin Money, the sixth-largest retail bank in Britain by total assets, with 6.6 million customers. The £2.9 billion deal, announced in March, is set to create the UK's second-largest mortgage and savings group, second only to Lloyds Banking Group.
Changes to Investment Services
After the acquisition is completed, Virgin Money's investment business, which serves approximately 150,000 customers, will be sold to Octopus Money, subject to Financial Conduct Authority (FCA) approval. This means that Virgin Money's investment customers will transfer to Octopus Money, which will provide ongoing support with no immediate changes to service teams. However, it's important to note that some digital investment services do not have Financial Services Compensation Scheme (FSCS) coverage, and customers should confirm the level of protection for their investment accounts moving to Octopus Money.
The Virgin Money brand will cease for investment business once the transition to Octopus Money is complete.
Branch Operations
Regarding branches, no specific announcements on changes or closures of either Nationwide or Virgin Money physical branches post-takeover were found. While acquisitions like these may lead to brand consolidations and branch reviews over time, no future plans for branches were detailed in the search results.
FSCS Protection
For Nationwide customers, existing FSCS protections on eligible deposits should continue under Nationwide's coverage, unless explicitly altered. Customers with savings accounts with both Nationwide and Virgin Money will continue to benefit from the maximum FSCS protection on each of their accounts.
Expansion of Services
The acquisition will bolster Nationwide's mortgage, savings, current account, and credit card divisions, as well as broaden its business banking offering. Customers will benefit from Virgin Money's expertise in personal lending, credit cards, business banking, and accounts for clubs and societies.
Nationwide is known for giving its profits back to its members, such as a £100 payment made two years in a row. The acquisition puts Nationwide in a stronger position to offer rates for mortgages and savings that are, on average, better than the market average.
Product Changes
There could be changes to products such as current accounts, savings accounts, and cash ISAs in the future. Customers who have savings with both Nationwide and Virgin Money will continue to benefit from the maximum FSCS protection on each of their accounts.
Workforce and Future Uncertainties
The future of Virgin Money's 7,300-strong workforce and its investment service launched last year is uncertain. The deal is rare as it involves a building society acquiring a listed bank.
It's worth noting that building societies, like Nationwide, are owned and run by their members, while banks, such as Virgin Money, are floated on the stock market and owned by shareholders. Profits generated by Virgin Money will be retained for the benefit of customers.
Competitive Offerings
Both Nationwide and Virgin Money have recently launched competitive deals, including Nationwide's £175 switching offer and Virgin's 10% interest current account. The acquisition has created a banking group with 696 branches, second only to Lloyds Banking Group.
Lloyds Banking Group has announced it will close another 55 branches next year.
In conclusion, the acquisition of Virgin Money by Nationwide will deepen Nationwide's products and services faster than could be achieved organically. This is the biggest UK bank takeover since the 2008 financial crisis. Customers of both banks can expect a broader range of services and competitive offerings in the future, with no immediate changes for customers of either bank. However, the Virgin Money brand will eventually be phased out after six years.
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