Nationwide CEO: No plans for more big acquisitions after £2.9bn Virgin Money deal
The chief executive of Nationwide has said the lender is not considering any more big-ticket acquisitions, with Britain’s largest building society already busy enough finalising its £2.9bn takeover of Virgin Money.
Debbie Crosbie, who joined Nationwide in June 2022, told City PM that the lender was focused on making the most of its tie-up with Britain’s sixth-biggest high street bank.
“I think we’ll be focusing primarily on the one that we’ve got on our plate at the moment. We have no other plans for any major acquisition,” Crosbie said. “Virgin Money gives us both the strength in our core markets and the depth that we really require to compete.”
The deal shocked the City when it was first put forward in March and stands to be the country’s biggest banking merger since the financial crisis.
It is set to mark Nationwide’s entry into the riskier business banking market as it looks to scale and diversify away from interest rate-sensitive savings and mortgages.
Crosbie added: “I think we will be concentrating on making the most of that acquisition, really improving the customer experience in terms of Virgin Money and Nationwide and delivering the benefits of that deal before we even start to think about anything else in the future.”
The deal comes during a period of increasing consolidation within the UK’s mid-sized banking sector as lenders like Nationwide that have recently become flush with cash pounce on smaller rivals struggling with cost pressures and a lack of scale compared to the biggest banks.
Coventry Building Society is putting the final touches on a £780m takeover of The Co-operative Bank, with an announcement expected in the coming days, while Barclays struck a deal to buy most of Tesco Bank in February.
Recently, Nationwide has been put forward as a potential bidder for TSB Bank if it eventually goes up for sale under a new parent company.
The bank’s Spanish owner Banco Sabadell is currently facing a hostile takeover attempt by its bigger domestic rival BBVA that some analysts believe is likely to succeed. TSB is considered an undesirable asset for BBVA as it has a much smaller presence in the UK than Sabadell.
Crosbie herself served as the CEO of TSB between 2019 and 2022. She did not directly comment on the matter when asked if Nationwide would consider a bid.
Nationwide’s takeover of Virgin Money was approved by the latter’s shareholders on Wednesday. The transaction is expected to complete in the fourth quarter of this year following regulatory approval.
The society said on Thursday that it could realise a gain of as much as £1.5bn from the acquisition but that the final figures could vary.
“One of the great things about being a mutual is we don’t have to distribute profits,” Crosbie added. “The market consensus profit number that Virgin Money have got out there is just under £500m – it’s £480m this year. So that’s an example of the type of money that we’ll be able to retain within Virgin Money and reinvest.”
Crosbie’s comments came after Nationwide reported another year of bumper earnings on the back of higher interest rates. It plans to pay eligible customers a total of roughly £385m directly into their accounts next month.