Nationwide has warned it will have to plough funds into bringing Virgin Money’s customer service and IT systems up to scratch.
Britain’s biggest building society, owned by 16m members, is buying the stock-market-listed lender for £2.9billion.
The deal – the biggest in UK banking since the financial crisis – has been criticised by some members after they were denied a vote on the plan.
Takeover: Nationwide, led by chief exec Debbie Crosbie (pictured), is buying the stock-market-listed lender Virgin Money for £2.9bn
Nationwide says the buyout will give it access to business banking, cheaper funding and the lender’s profits.
It plans to run Virgin Money as a separate brand for at least four years, paying tycoon and biggest shareholder Sir Richard Branson at least £76million for the privilege, as it gradually integrates the two lenders.
But the society, led by chief executive Debbie Crosbie, refused to spell out the cost of combining the two businesses.
Members yesterday challenged Nationwide to justify the deal, which will create the second-biggest saving and loans group after Lloyds.
Virgin Money joined forces with Clydesdale Bank and Yorkshire Bank in 2018.
‘We need a sensible period of time to invest in [Virgin Money’s] customer service and integration,’ finance director Chris Rhodes told the online-only annual meeting.
‘There are challenges,’ he added. ‘Integration of Virgin Money and Clydesdale is not as full as we would like.’
The news will raise eyebrows for some members because Crosbie’s knowledge of Virgin Money and its leadership was meant to make the deal less risky.
Crosbie spent 22 years at Clydesdale, latterly as acting chief executive, but left in 2019 after it merged with Virgin Money and she lost out on the top job.
She said ‘a huge amount of careful consideration’ had been given to the risks and opportunities of the buyout.
Nationwide was ‘confident’ of more than covering the costs of integration, she said.
She declined to comment on the decision, revealed by The Mail on Sunday, to close the account of Mikael Armstrong, who led the fight to give members a say on the Virgin deal, saying: ‘We would never de-bank anyone for their legally held views.’
Fewer than 300 people logged on to the event, less than half the number who attended in-person 20 years ago, one member noted.
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