Customer lending by Virgin Money slowed in recent months as the owner of the former Clydesdale Bank prepares to be taken over in a £2.9 billion mega-deal by Nationwide Building Society.

In what will likely be its final reporting period as an independent publicly-listed company, Virgin Money said loans fell by 0.9% to £72bn during the quarter to the end of June. Mortgages and business lending both fell by 1.1%, to £56bn and £9.2bn respectively.

This was offset to some extent by a 1.3% increase in unsecured lending to £6.8bn, boosted by the strength of credit card borrowing.

READ MORE: Profits rise at Virgin Money ahead of merger but ‘headwinds’ to come

Virgin Money also enjoyed 2.4% growth in savings deposits during the period, bringing its total to £69.8bn. The bank said this reflected strong ISA demand with the start of the new tax year.

Nationwide announced its bid for Virgin Money - which comprises parts of the old Northern Rock, Clydesdale Bank, and Yorkshire Bank - in March at a price of 220p per share. Nationwide members were not given a vote on the deal which prompted a shareholder revolt that was seen off by the board of directors led by Glasgow-born and raised chief executive Debbie Crosbie.

The deal will be the biggest in UK banking since the financial crisis and is now expected to go ahead by the end of this year following clearance last month from the Competition and Markets Authority (CMA).

"Our strategy remains on track, with financial performance in line with guidance," said Virgin Money chief executive David Duffy, who is set to retire once the acquisition is completed.

"We delivered continued growth in deposits and unsecured lending in Q3 and remain focused on developing innovative new products for customers and maintaining good momentum into Q4. The acquisition by Nationwide is progressing as anticipated with the recent CMA clearance, and we expect it to complete in the final quarter of the calendar year."

READ MORE: Nationwide boss returns to Glasgow roots with Virgin deal

Virgin Money is a major employer in Glasgow and has approximately 3,500 staff across Scotland. Prior to the acquisition being announced the bank had been rationalising its operations, resulting in multiple branch closures and the loss of some 150 full time equivalent jobs at the end of 2023.

The restructuring was part of wider cost-savings plans that have been paused since Virgin Money agreed the deal with Nationwide. 

Nationwide has said it does not intend to make any material changes to the size of Virgin Money’s workforce - which includes about 3,000 people in and around its registered head office in Glasgow - in the "near term”. However, union officials have warned of "further unease and anxiety about jobs and services" in the wake of the announcement.