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Nationwide defends ‘no vote’ on Virgin Money deal

Debbie Crosbie TSB
Debbie Crosbie: low demand (pic: Terry Murden / DB Media Services)

Nationwide Building Society chief executive Debbie Crosbie has defended its decision not to give its members a say on its £2.9 billion acquisition of Virgin Money.

Virgin Money’s shareholders approved the transaction in a vote taken yesterday, but Nationwide is not obliged under building society rules or its own regulations to put the decision to its 16 million members.

A petition organised by members urging the mutual to give them a vote on the deal has attracted about 5,200 signatures.

Ms Crosbie responded by saying there was limited demand across its customer base. She pointed to a survey of customers following its announcement of the proposed deal and showed that only 8% of the 21,929 respondents were against itl; 48% were neutral and 43% in favour.

“The large majority of people seem to be very content with the direction we’ve taken,” said Ms Crosbie, a former senior executive at Clydesdale Bank which was adopted the Virgin Money brand in a merger of the banks.

Nationwide’s offer for Virgin Money is a rare example of a building society acquiring a bank Ms Crosbie insists that Nationwide is getting a good deal. Based on market forecasts for the bank’s annual profits this year, the takeover represents a 17% return on the purchase price, she said.

Ms Crosbie was commenting on the deal after publishing annual results that showed its pre-tax profits for the year to 4 April had fallen by a fifth to £1.78 billion.

The earnings figure was hit by the £100 cash payments that it distributed last year to each of its 3.4 million customers who have both a current account and a savings account or a mortgage.

Despite costing the group £344 million there will be another round of £100 bonuses to eligible customers next month, amounting to about £385 million.

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