A major proposed takeover in the banking sector took a big step towards completion today - and it brought the disappearance of a high-profile brand from the sector a little closer.
Nationwide announced this morning that City regulators, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA), have approved the mutual’s cash acquisition of Virgin Money, which incorporates the former Clydesdale Bank operation.
The proposed acquisition was first announced in March, when Nationwide revealed it had made a cash offer worth £2.9 billion for its banking counterpart. It raised the prospect of the biggest deal in the UK banking sector since the financial crisis of 2008 and 2009.
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The proposal, which saw Nationwide table an offer of 220p per share, including a planned 2p per share dividend payment, was then approved by Virgin Money shareholders in May.
Today’s news of approval from the FCA and PRA comes after the Competition and Markets Authority gave the deal its blessing in July.
The last remaining hurdle which must be cleared before the deal can fully complete is court approval of the scheme document, with a hearing set for September 27. It is anticipated the scheme will become effective on October 1, when the listing of Virgin Money shares on the London Stock Exchange and Australian Securities Exchange will be cancelled.
The acquisition marks a homecoming of sorts for Debbie Crosbie, the Scottish chief executive of Nationwide. Ms Crosbie, who was born and raised in Glasgow, spent more than two decades working at the former Clydesdale Bank, which continues to be a major employer in her home city.
The planned takeover will bring together Britain’s fifth and sixth largest retail lenders, creating a combined group with around 24.5 million customers, more than 25,000 staff and nearly 700 branches.
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But the move is set to ultimately spell the end of the Virgin Money brand. Nationwide plans to rebrand the Virgin Money business as Nationwide within six years, although it will keep the two brands initially.
It emerged last month that Virgin Money had spent around £10 million in fees relating to the takeover and the bill was expected to be “significantly higher” during the rest of the year.
The deal, which will be the largest in UK banking since the financial crisis, will cost an estimated £80m in fees and expenses with Nationwide covering roughly £41m of the bill and the rest paid by Virgin Money. This includes legal and regulatory fees as well a hefty payments to Virgin Money advisors at Goldman Sachs and JP Morgan, along with Nationwide's advisors at UBS.
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