If the deal does go ahead, it will be the UK's biggest bank takeover since the 2008 financial crisis, which began with the collapse of Northern Rock.
ADVERTISEMENTNationwide Building Society has surprised the banking world with an agreement to buy Virgin Money for £2.9 billion (€3.4 billion), to create the UK’s second-largest mortgage and savings group.
Nationwide is the UK's biggest building society, with nearly 18 million customers.
Virgin Money is the UK's sixth largest retail bank serving some 6.5 million customers.
No plans for short-term change
Nationwide says it does not plan to make any significant changes to Virgin Money's staff over the short term and will keep using the Virgin Money brand for the time being.
However, it will be phased out over the next six years, if and when the proposed takeover is completed.
A combined group would create just under 700 branches in the UK and, Nationwide said, it planned to keep a branch in each place where the two businesses currently have a presence until at least the beginning of 2026.
Nationwide plans to stay a mutual and gradually integrate Virgin Money into its business although Virgin Money customers will not automatically become "members" of the building society.
After unveiling the deal, Nationwide's chief executive, Debbie Crosbie said: "A combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK."
She added: "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."
Building society looking to offer competitive products
Nationwide says it wants to offer its customers "better than the market average" deals on mortgages and savings.
Commenting on the deal, Russ Mould, investment director at AJ Bell told The Daily Telegraph: "It is an interesting time for big deals in the mortgage sector", with tentative signs that the property market is regaining strength on expectations the Bank of England will cut rates later this year.
"Nationwide is effectively pouncing on Virgin Money at a time when prospects are improving for its industry," he said.
If the deal does go ahead, it will be the biggest UK bank takeover since the 2008 financial crisis.
That crisis was triggered by the collapse of the Northern Rock bank which was subsequently bought in 2012 by Virgin Money.
