He On a national scale The building society is facing growing calls for its 16 million members to have a say in its proposed £2.9bn takeover of rival Virgin Money in what would be the UK's biggest banking deal since the financial crisis. .
It's been just under two weeks since the building society shocked the city when He said he had reached a preliminary agreement pay Virgin Money shareholders 220 pence per share, a 38% premium to the lender's share price at the time.
The move, if given the go-ahead, would create Britain's second-largest savings and loan group and propel Nationwide into the big league of retail banking with 700 branches and combined assets of around £366.3bn millions.
However, the deal would mean an entry into the riskier world of corporate banking and taking over Northern Rock's former mortgage business. The acquisition would also mean a big payout for Sir Richard Branson, a move that could be uncomfortable for some Nationwide insiders. Branson is expected to get more than £400m from the deal due to his remaining 14.5% stake in Virgin Money, which he founded in 1995.
While most UK banks are owned by their shareholders, Nationwide is the last major mutually owned financial institution, meaning the board is accountable to its customers who have bank, savings and mortgage accounts. Some of these members are said to be wondering whether a major acquisition would be in their best interests.
As well as the massive payout to Branson, a successful takeover would also mean a £6m payday for Virgin Money bosses, with veteran chief executive David Duffy pocketing £3.5m alone.
House of Lords member and former Pensions Minister Ros Altmann is among those who have said it would be “wise” for the building society to give its members a say in the takeover.
"The beauty of a mutual is that it is run in the interests of its members, who also have the right to vote, and giving them the opportunity to exercise their right in a major transaction seems sensible," he said.
Financial services expert and colleague Sharon Bowles has suggested that while the deal looks good on paper, it would result in a significant change of character for Nationwide.
"Are they [the members] Will you be better off being bigger? she asked.
Nationwide has acquired several smaller building societies in the past, including Dunfermline, Derbyshire and Cheshire, without a vote of its members. However, this deal is a much bigger deal. Newcastle-based Virgin Money is about a third the size of Nationwide and includes Yorkshire and Clydesdale banks.
Nationwide boss Debbie Crosbie wrote to the society's 16 million members setting out the deal, but the letter did not explain why it would be in the best interests of members, partly because the board has not yet made a formal bid for Virgin. .
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“Combining our businesses would put us in a stronger position to continue providing fairer share payments to our eligible Nationwide members, better value mortgages and savings and leading customer service. "Over time, we will aim to offer a wider range of products and services to our customers and members, including Virgin Money's well-established business banking services," the letter to members said.
Nationwide's offering has been backed by several mutual sector champions and other analysts.
Robin Fieth, chief executive of the Association of Building Societies, said: “There are many parts of financial services that would benefit from the mutual model, not least business banking.”
At the weekend, the Mail on Sunday reported that if just 500 Nationwide members deposited £50 each, they could call a special meeting to push for a vote on the Virgin deal. The society is reported to have received legal advice that a members' vote is not required under the Building Societies Act 1985 to approve the Virgin acquisition.
The company's board fears that a vote would not only take it past the April 4 deadline by which the offer must be made, but would also tie the board's hands and restrict its ability to buy a bank. which is listed on the stock exchange.
