CMA launches investigation into Nationwide’s £2.9bn fresh money acquisition

Britain’s competition watchdog has launched an investigation into Nationwide’s £2.9 billion takeover of Virgin Money, examining potential antitrust issues.

The Competition and Markets Authority (CMA) confirmed the investigation on Friday and set a deadline of July 26 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 approving the deal after a two-month preliminary review or expanding the investigation for a more detailed investigation. Interested parties are invited to submit their views on the acquisition before June 14.

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

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

The CMA can investigate any merger where the target company generates an annual turnover of more than £75 million. Virgin Money, with a turnover of £1.8 billion last year, exceeds this threshold.

Under CEO Sarah Cardell, the CMA has rarely reviewed bank mergers due to their rarity. The last such review took place in 2019, when OneSavings Bank’s acquisition of Charter Court Financial Services came under scrutiny, with a particular focus on the buy-to-let mortgage market. After an initial investigation, the deal was approved.

Approval by the CMA is a stated condition to the completion of the merger, as set out in Nationwide and Virgin Money’s recent merger documents.

This investigation by the CMA will be closely watched by industry stakeholders as it will determine whether the merger goes ahead and what impact it may have on competition within the UK banking sector.