Nationwide is one of the biggest lenders in the country. Its board and management is trying to rush through a deal to that is likely to line billionaire Richard Branson’s and other Virgin Money shareholders pockets, ignoring whether that might jeopardise their own customers being able to make mortgage payments and keep their homes in the future.
Nationwide is one of the safest lenders in the UK, it provides 1 in every 10 mortgages and offers some of the best deals. It doesn’t have shareholders as it is a building society, not a bank - in fact if you’re a customer, you are actually an owner of the society through your membership. It is also a rare voice in the UK for not closing branches.
Contrast this with Virgin Money, with its struggling share price, unhappy customers (it ranks 15th out of 16 for customer satisfaction), and bad debts.
It is also mired by IT issues after years of under-investment following the acquisitions of struggling or failed banking brands like Clydesdale, Yorkshire and Northern Rock. No wonder Branson and his chums want to offload this turkey, but until now no one has been daft enough to buy it.
Enter Nationwide, whose new CEO Debbie Crosbie used to work at CYBG until five years ago, when it turned into Virgin Money. She later left to join TSB. She has now bid to buy this bottom-tier bank from her old boss for 40% more than its market value. If this transaction goes through, David Duffy, the CEO of Virgin Money, is expected to be given a golden parachute worth £15 million, while Branson is set to pocket nearly £700 million. No doubt there will be hefty bonuses for Nationwide bosses, who will pocket the cash and move on, leaving a mess that the faithful staff and trusting customers will be stuck with for years afterwards.
Nationwide management are exploiting a loophole in the law, trying to rush through the deal, and avoiding putting the proposed takeover to a member vote - probably because they know it won’t pass.
However Virgin Money shareholders do get to vote as it’s clearly a better deal for Branson and his chums.
So much for Nationwide’s pledge to be “fairer, more rewarding, and for the good of society” - throwing their customers under the bus to fill others' pockets.
If Nationwide takes over Virgin Money, and the risks associated, the combined group may not have the reserves to weather the next financial crisis.
Instead it will be wasting its capital on the purchase and restructuring of Virgin Money, rather than keeping mortgage rates low for its customers. As a result, prices will go up at a time when millions of customers are already struggling to make payments on their home during a cost of living crisis - meaning millions of Nationwide customers will end up with a worse deal and could risk losing their homes.
If you’re a Nationwide customer, you can demand a vote and stop this lousy deal going through. A request for a special meeting to hold a vote has already been made, but Nationwide isn't acting on it, as it should under the society’s rules. You can sign the petition calling for a meeting by visiting bit.ly/NationwideVote. But what you should probably do is take your money out in protest and get a better deal today elsewhere, while you still can.
Mikael is leading the campaign to Give Nationwide Members a say on the purchase of Virgin Money
