Britain's Nationwide eyes near $2 billion gain on Virgin Money deal (updated)

Virgin Money UK

23/05/2024 08:08

(Recasts with details of acquisition)
       LONDON, May 23 (Reuters) - Nationwide Building Society
 NBS.L  said it could realise as much as a 1.5 billion pound
($1.91 billion) gain on its acquisition of rival Virgin Money,
announced earlier this year and expected to close in the fourth
quarter.
    The gain reflects the gap between Virgin Money's  VMUK.L 
tangible net asset value of 4.4 billion pounds and the
acquisition price of 2.9 billion pounds, Nationwide said, noting
that the final figures on completion could vary.
    The deal showed Nationwide's strong financial position as a
member-owned society with a cheaper cost of capital than many
rivals, Chief Executive Debbie Crosbie told Reuters.
    "Strategically as a mutual that puts us in quite a different
place to not only make the acquisition, but deliver value and
benefit back to our members," she said, adding that Virgin Money
customers should benefit in the long run as well.
    Nationwide also reported that its annual profit fell to 1.8
billion pounds ($2.29 billion), from 2.2 billion a year earlier
as competition in the mortgage market squeezed margins.
    Although profit fell, Nationwide said it rewarded customers
with a record 2.2 billion pounds in value, including a 344
million pound cash payout and better than market rate pricing on
products.
    Nationwide extended its promise not to close more of its 605
branches until 2028, at a time when Britain's high street
lenders are slashing their outlets across the country as
customers increasingly bank online. 
    Credit impairment charges reduced to 112 million pounds from
126 million the year prior, and Nationwide said mortgage arrears
remained low although they have started to increase as higher
interest rates push up monthly payments for homeowners.



($1 = 0.7862 pounds)

 (Reporting By Lawrence White
Editing by Tomasz Janowski, Kirsten Donovan)
 ((lawrence.white@thomsonreuters.com; +44 20 7513 5083; Reuters
Messaging: @ReutersLawrence))