Virgin Money approves proposed £2.9bn takeover by Nationwide Building Society

High street bank Virgin money has approved a £2.9bn takeover by Nationwide Building Society.

The two banking companies have reached a preliminary agreement, with Nationwide now set to look through the books before pushing ahead with the takeover. Nationwide put forward a 220p-a-search offer to acquire the high street lender, also including a planned 2p-per-share, with the group stating that this was 38% increase on Virgin Money's closing share price on Wednesday (March 6).

The proposed takeover would create a combined lender worth around £366.3bn, with total lending and advances of around £283.5bn. It would also create the UK's second largest mortgage and saving group.

Nationwide has said that the takeover would also not see any material changes to Virgin Money's workforce. Virgin Money currently employs around 7,300 people.

Debbie Crosbie, chief executive of Nationwide Building Society, said: “Importantly, Nationwide will remain a building society, and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK, including our continuing commitment to retain existing branches as part of our Branch Promise, and leading levels of customer service. We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future.”

Virgin Money chief executive David Duffy said: “This potential transaction with Nationwide represents an exciting opportunity to build on the significant progress we have made in becoming the only new Tier 1 bank in recent history. The combined scale and strength would expand our customer offering and complete our journey in the banking sector as a national competitor.”