Nationwide members brace for payments bonanza after unexpected Virgin Money acquisition

Nationwide insiders look set for a payout bonanza after the building society revealed a £2.3bn windfall from its acquisition of Virgin Money.

Chief executive Debbie Crosbie told the Mail it was now “well positioned” to repeat its previous policy of making £100 “fairer share” payments to eligible customers.

And he did not rule out the possibility of another one-time payment to reward customers after the acquisition.

Asked by the Mail about such a move, Crosbie said: “We are not ready to make those announcements.”

“But we are really confident that this year we will be able to do something that far exceeds what would normally be expected.”

However, Virgin Money customers will not be eligible for the fairer share payment.

The comments came as Nationwide confirmed it had made a huge profit on its £2.8bn purchase of Virgin, as first reported by The Mail on Sunday. The deal was completed last month.

However, the price was so low that Nationwide paid much less for Virgin’s assets than they are now considered worth.

The resulting £2.3bn financial boost was revealed yesterday when Nationwide, Britain’s biggest lender, published its half-year results.

They showed record mortgage lending and increases in savings balances in the six months to the end of September, but also saw their profits fall 43 per cent to £568 million.

Nationwide said it was mainly due to falling interest rates – as higher rates tend to mean higher profits for lenders – as well as its “choice to offer competitive rates” to customers, reducing margins.

A Nationwide spokesperson said: “The economic outlook remains uncertain and the outlook for interest rates means we expect to have passed peak profitability.”

However, the boost from the Virgin deal gave employers confidence that the building society will be able to return to offering benefits to its members at the end of its financial year in March 2025.

This year and last year it handed out £100 payments along with other offers such as high-yield savings bonds.

Crosbie said of the prospect of another “fairer share” payment: “While always subject to board approval, we are well positioned to achieve this.”

Payments from previous years have been applied only to those who have checking accounts as well as a qualified mortgage or savings product.

This year it paid out £385m to 3.85m customers, up from £344m the previous year.

The Virgin integration will take place over several years and there are no plans to drop the name at this time.

John Cronin, an analyst at SeaPoint Insights, said the gain on the acquisition announced yesterday was “much larger than was expected when the deal was first announced.”

He added that the sharp drop in profits “was not unexpected due to changes in official rates during the period.”