Nationwide members want vote on £3bn bid for Virgin Money

Nationwide must give its members a vote on its planned takeover of Virgin Money, politicians and customers demand this weekend.

The building society surprised the City last week by accepting a £2.9bn bid for the UK’s sixth largest bank, founded by Sir Richard Branson.

The deal would create Britain’s second-largest savings and loan group. It would catapult Nationwide into the big league of retail banking, with almost 700 branches and £366 billion in assets.

Nationwide has acquired several smaller building societies in the past, including Dunfermline, Derbyshire and Cheshire, without a vote of its members.

But the Virgin Money deal is easily the largest, prompting some of the mutual members (business owners) to demand a vote on the outcome.

Financial services expert Baroness Bowles said the deal looked good on paper, but members needed more details and should have a say.

Bowles, who sits on the board of the London Stock Exchange, said the deal could mean “a big change of character for Nationwide, which would be jumping into the league of the big banks.”

He added that there are “obvious benefits” for members, including more branches.

Bowles also questioned what benefits members would get.

‘Will they be better off if they are bigger?’ she asked.

Other Nationwide members have taken to social media to demand a vote on what they see as a transformative deal.

“This may be within the letter of Nationwide’s rules, but it is a far cry from the spirit of a mutual,” said one.

Nationwide, headed by chief executive Debbie Crosbie, insists it has received “extensive” legal advice – including from an unnamed senior lawyer – that a member vote is not needed under the Building Societies Act 1985.

The society also argues that a survey would “tie the board’s hands” and restrict its ability to buy a publicly traded bank. It plans to write to 14 million members in the coming weeks outlining the benefits of the deal. Former Business Secretary Vince Cable said: “My read is that the acquisition will strengthen our largest mutual and appears to make commercial sense.”

Crosbie, who is the former chief operating officer of Virgin Money and therefore knows the business well, said the combined group would “bring the benefits of fairer, mutually owned banking to more people in the UK”, including commitment to keep branches open when other major players are closing theirs.

You have until April 4 to express your firm intention to submit an offer or withdraw.

Experts have said Virgin Money is now “in play” and rival bidders may emerge.

Nationwide may be reluctant to enter a bidding war if a third party enters the fray.

Branson set up Virgin Money in 1995. The bank bought Northern Rock from the Government after the 2008 financial crisis.

It was bought by Clydesdale and Yorkshire bank for £1.7bn in 2018 and is now around a third the size of Nationwide.

Virgin Money will remain a separate legal entity within Nationwide with its own board of directors and banking license for the “medium term”. Calls to give members a vote on the deal come as a Mail on Sunday analysis found Virgin Money chief executive David Duffy could be paid £12m if the current offer is accepted.

Duffy, who earned £2.7m last year, has been criticized by Virgin Money shareholders over his pay and the bank’s lackluster performance in recent years. If he were to leave as a result of a Nationwide takeover, he could command a large payout under the terms of his long-term bonus plan.