Nationwide’s takeover of Virgin Money will not reduce competition for mortgages and credit cards, the competition watchdog has ruled, as it gave it the green light.
The Competition and Markets Authoritysaid on Friday that the £2.9bn deal, the biggest in banking since the financial crisis, would not lead to a substantial lessening of competition in the home loans market.
Virgin Money shareholders voted overwhelmingly in May in favour of the 220p-a-share deal, with 89% backing the takeover, which could create Britain’s second-largest savings and mortgage provider.
This included backing from its largest investor, Sir Richard Branson, who owns a 14.5% stake in the bank he founded in 1995. He is poised to receive £724m from the takeover.
Nationwide members were not asked to vote on the transaction as the mutual said it did not need a member vote for the deal. However, more than 600,000 of its members backed all resolutions at its AGM despite calls from campaigners to vote against them as a protest for not being given a specific vote on the deal.
The CMA’s investigation looked into whether the newly merged company would lead to a lessening of competition in the mortgage and credit card market, concluding that there would still be sufficient competition.
The investigation led to the regulator engaging with the Financial Conduct Authority and the Prudential Regulation Authority to assess the impact.
Responding to the CMA approval, Debbie Crosbie, Nationwide’s chief executive, said: “We remain on course to receive all the necessary approvals to complete the deal in the final three months of this year.”
Virigin Money said: “We welcome the CMA’s decision to unconditionally clear the proposed acquisition by Nationwide after its phase 1 investigation.
“The enlarged group will combine two complementary businesses that together can offer more great products and services to a larger customer base.”
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Virgin Money’s share price has jumped by 35% to more than 215p since the banks announced tthe agreed deal on 7 March.
Nationwide will pay £15m in annual royalties to Virgin Group to use the brand name over the first four years, before paying £250m to exit the contract, and eventually phasing out Virgin Money’s name entirely.