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CMA Launches Probe into Nationwide’s £2.9bn Takeover of Virgin Money

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Britain’s competition watchdog has commenced an investigation into Nationwide’s £2.9 billion acquisition of Virgin Money, examining potential anti-trust concerns.

The Competition and Markets Authority (CMA) confirmed the probe on Friday, setting a July 26 deadline for its initial decision.

The CMA’s investigation will assess whether the merger could reduce competition within the banking sector. The regulator’s options include clearing the deal after a preliminary two-month review or extending the inquiry for a more detailed examination. Interested parties are invited to submit their views on the acquisition by June 14.

Nationwide agreed to acquire Virgin Money earlier this year in an all-cash deal, marking the largest takeover in the UK banking sector since the financial crisis. Virgin Money shareholders, including Sir Richard Branson’s Virgin Group, recently approved the acquisition in a shareholder vote. However, some Nationwide members have expressed dissatisfaction over being excluded from the decision-making process. Nationwide’s CEO, Debbie Crosbie, maintains that the majority of members are supportive of the deal.

As part of the CMA’s review, feedback will be sought from high-street competitors such as Barclays, Lloyds, NatWest, HSBC, and Santander. Nationwide’s building society competitors, including Skipton and Coventry, are also expected to provide input.

The CMA can investigate any merger where the target company generates annual revenues exceeding £75 million. Virgin Money, with revenues of £1.8 billion last year, surpasses this threshold.

Under the leadership of Chief Executive Sarah Cardell, the CMA has infrequently reviewed banking mergers due to their rarity. The last such review occurred in 2019, when OneSavings Bank’s acquisition of Charter Court Financial Services was scrutinised, primarily focusing on the buy-to-let mortgage market. The deal was cleared following an initial investigation.

Clearance by the CMA is a stipulated condition for the completion of the merger, as outlined in the recent merger documents from Nationwide and Virgin Money.

This investigation by the CMA will be closely watched by industry stakeholders, as it will determine whether the merger proceeds and what implications it may have for competition within the UK banking sector.

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