The Competition and Markets Authority (CMA) has given the green light to Nationwide Building Society's £2.9 billion acquisition of Virgin Money UK PLC, clearing the way for one of the largest shake-ups in UK retail banking since 2008.
In a statement released on Friday, the CMA said the merger "does not give rise to a realistic prospect of a substantial lessening of competition" in key areas such as mortgages and credit cards.
The deal, first announced in March 2024, will create the UK's second-largest mortgage lender after Lloyds Banking Group. The combined entity is set to have around 700 branches and assets of approximately £366.3 billion.
The CMA's investigation focused on the potential impact on competition in owner-occupied mortgages, buy-to-let mortgages, and credit cards. Despite the merger creating a significant player in these markets, the watchdog found that other major banks and specialist lenders would continue to exert sufficient competitive pressure.
A spokesperson for Virgin Money welcomed the decision, stating: "The enlarged group will combine two complementary businesses that together can offer more great products and services to a larger customer base."
The merger has faced some controversy, with concerns raised about Nationwide members' lack of voting rights on the acquisition. The CMA noted these concerns but said they fell outside the scope of its competition-focused investigation.
Virgin Money shareholders overwhelmingly backed the deal in May, with over 89 per cent voting in favour, surpassing the required 75 per cent threshold.
The transaction marks Nationwide's entry into the business banking sector, as it seeks to diversify beyond its traditional focus on savings and mortgages. Virgin Money is expected to maintain its separate legal entity status and banking licence within the Nationwide group for the medium term, with plans to phase out the Virgin brand within six years.
Subject to final regulatory approvals, the deal is expected to complete in the fourth quarter of 2024, creating a formidable new force in the UK banking landscape.
The CMA's decision comes as welcome news for both parties, paving the way for the creation of a stronger competitor in the UK retail banking market.
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