Lucinda Guthrie’s Post

GBP Bonds: Britain’s Nationwide Merger & Acquisition of Virgin Money Nationwide Building Society's acquisition of Virgin Money Intermediaries UK for 2.9 billion pounds ($3.7 billion) signalling a strategic expansion to become the UK's second-largest savings and mortgage provider amidst a trend of banking consolidations.  Nationwide's asset size fell by a quarter, a move facilitated by its strong CET1 ratio 26.8%, which is among the highest in Europe. Such financial robustness is reflected by Nationwide's ability to offer a 38% premium on Virgin Money's share value as of March 6, funded from its existing reserves, showcasing market confidence as Virgin Money's shares surged by 36% following the announcement. Despite this market reaction, Nationwide's stock has moved to a stable 136.00 GBP, indicating investor stability and confidence in Nationwide's strategic direction. This merger, leveraging Nationwide's mutual status and Virgin Money's customer base, is set to reshape the UK banking sector with a focus on mutual ownership and enhanced customer service. CreditSights predicts that Nationwide's credit rating will stay stable, while Virgin Money's could rise slightly, post-acquisition. The effect on their current bonds is seen as minimal, overshadowed by Nationwide's anticipated expansion in funding, likely placing it just behind Lloyds Banking Group. Virgin Money's bonds, especially the £844m AT1 notes, have seen improved performance, closing the spread with Nationwide's. The £300m senior bond of Virgin Money also tightened significantly. Each bank holds a notable euro benchmark, with Virgin's set for potential gains, especially if its ratings approach Nationwide's. However, the continuation of Virgin Money as an independent brand is unclear, and restructuring its senior bonds may be necessary due to different resolution buffer approaches. At CANDOUR CAPITAL, we can offer the opportunity to access these bonds, particularly with Nationwide's expected capital-raising activities post-merger. If you're interested in accessing these potential bonds or wish to stay updated, please let us know. #fixedincome #investing #gbp #richardbranson

The proposed merger between Nationwide and Virgin Money is to be investigated by the UK's competition watchdog. The country's biggest building society announced the £2.9bn deal with its smaller rival in March. It is the largest banking merger since the 2008 financial crisis and create the UK’s second-largest provider of mortgages and savings. The Competition and Markets Authority (CMA) said it will examine whether it would result in a substantial lessening of competition within the UK banking sector. The takeover would result in a combined group with 700 branches, second only to Lloyds Banking Group. The combined assets of the groups would total roughly £366.3bn. Virgin Money is now the UK's sixth largest retail bank with around 6.6 million customers, while Nationwide has nearly 18 million customers. When the deal was struck, Nationwide said it would not make any material changes to Virgin Money's 7,300 employees "in the near term". It said that it would keep using the Virgin Money brand initially but it would be phased out over six years once the proposed takeover is completed. Last week, Virgin Money shareholders voted in favour of Nationwide’s offer, despite concerns from some investors that the takeover might “sell shareholders very short”. Read more ➡️ https://buff.ly/4e3cfWN The Scottish Chambers of Commerce Network is here to support your business - reach out to share your views, concerns and opportunities. #SCCnews #businesssupport #businessnetwork #businessvoice #businessleader Sign up for the Scottish Chambers of Commerce enewsletter at https://buff.ly/3CpsQnu

📊 Excited about M&A: Thoughts on Nationwide’s Acquisition of Virgin Money for £2.9 Billion I’ve been increasingly interested in the M&A space, particularly in the strategic decisions behind major acquisitions and their broader market impact. Recently, Nationwide announced its £2.9 billion acquisition of Virgin Money, one of the largest financial sector moves in the UK this year. Here’s why this caught my attention: 1️⃣ Consolidation Amid Market Challenges: The acquisition is part of a wave of consolidation we’re seeing in the financial sector as firms aim to expand their market share and optimize operations in response to inflation and high-interest rates. 2️⃣ Impact of Regulation: UK M&A deals, especially in banking and financial services, face significant regulatory scrutiny—making strategic and compliant growth more challenging yet critical! 3️⃣ Future of UK M&A: Nationwide’s acquisition could spark more interest in high-quality UK assets, especially given increased demand for resilience and innovation in sectors like renewable energy and fintech. I’d love to hear others’ thoughts on this significant move and what it means for the future of M&A in the UK! 🔗 Read more here: https://bit.ly/3ZtYrGn

I’ve occasionally given a #goodread shout out here to Marc Rubinstein and his Net Interest #newsletter. I remember years back engaging on a project shortly after his viewpoints were morphing from an idea into reality.   Net Interest has grown considerably since then.   The potential takeover of Virgin Money by Nationwide Building Society to create the country’s second-largest mortgage lender and savings group, speaks to a shift in the retail bank business landscape.   Below is a link to the teaser of a bigger read from Marc’s latest edition out today: The Last Challenger👇 The other story that caught my eye on this deal was a viewpoint yesterday by author Philip Augar writing in the Financial Times. As for the opening few lines ... “We’re not a . . . bank” says Nationwide’s website. “In that case, why are you considering buying one?” the mutual’s members might ask as the UK’s biggest building society weighs up an agreed offer for the challenger bank Virgin Money. It also leaves a number of banktech commentators wondering if this Virgin Money deal coming just weeks after Tesco Bank agreed to sell the bulk of its banking business to Barclays for £700m may mark a turning point for the country's original challenger retail banks.    #banks #competition #fintech #regulation #savings #mortgages #media

Why are Britain’s big, boring building societies gambling on UK Banks? Not too sure, but the surge & consolidation in UK finance has been galvanised, due to moderate/low levels of domestic growth, so consolidation aided by AI & on-line banking will drive down costs, with job losses. However, very few take-overs/mergers hit the high notes promised to shareholders, when being chased for their vote & consent. The CB/VM deal with NW is interesting, as the target is subject to a significant litigation claim on historic fixed rate lending, albeit, they won the 1st judgement. Can’t imagine NW will be keen to inherit a £500m bill, if the appeal & case goes against CB, but time will tell.

“The Blackhole Inside CBA” - posted this weekend. The Commonwealth Bank of Australia (ASX: CBA) share price may be up 55% over the past decade, but how fast do you think CBA’s profits have grown in that time? a. 25% b. 50% c. 75% d. 100% The answer: 13%. Over 10 years, CBA’s profits (or earnings per share – which is the best way to measure any business’ performance) have grown around 1.3% per year. And, believe it or not, I’m being generous. I’m excluding “extra items.” How about CBA’s dividends per share? How fast do you think CBA’s dividends have grown? The answer: 12%. Article continues (LinkedIn wouldn’t let me post the full story): https://lnkd.in/grb4uCzp

Nationwide Building Society to acquire Virgin Money - Nationwide Building Society has agreed to purchase Virgin Money. The agreement would establish the second-biggest savings and mortgage group in the UK. This is set to be the largest takeover of a UK bank since the 2008 financial crisis would occur if the deal closes. Previously Northern Rock Bank was nationalised as a result of the financial crisis, and Virgin Money later acquired it in 2012. The two companies together would form a group with 696 branches. Clifford Chance and Slaughter and May, two Magic Circle firms, are leading Nationwide's £2.9 billion acquisition of Virgin Money. Following Barclays' announcement last month that it will acquire Tesco's retail banking division for £600 million, analysts predict additional takeovers in this industry are to follow. Source: https://lnkd.in/efXPuMyg #ABTL #uklawyers #lawstudents #aspiringlawyers #commercialawareness

CMA to investigate £2.9bn takeover of Virgin Money by Nationwide Building Society The UK competition regulator has launched an inquiry into the £2.9bn takeover of Virgin Money by the rival lender Nationwide Building Society. The Competition and Markets Authority (CMA) said it had opened the first stage of its merger process to look at whether the deal – one of the largest transactions in the banking sector since the 2008 financial crisis – would lead to substantial lessening of competition. The CMA is seeking comments on the tie-up before 14 June and has set a deadline of 26 July for its phase 1 decision on whether to move to a more formal investigation. The deal has already been approved by shareholders at Virgin Money this month. Almost 90% of those who voted backed the deal, including Virgin Money’s largest investor, Sir Richard Branson. He is poised to receive £724m from the deal in return for use of the Virgin brand as well as his 14.5 % stake in the bank he founded in 1995. Nationwide members were not asked to vote on the transaction as the mutual said it did not need a member vote for the deal. Nationwide and Virgin Money declined to comment on the CMA inquiry. Meanwhile, the rival lender NatWest, which is part state-owned, announced it had bought back £1.2bn of shares owned by the Treasury in an off-market purchase as the bank moves a step closer towards full private ownership. The deal reduces the government’s stake in NatWest to about 22.5 %, down from 38 % at the end of last year. The government held a 84% stake at the height of the banking crisis when the UK state bailed out the stricken bank. Initial plans by ministers to launch a mass sale of NatWest shares to the public this summer were scuppered after the prime minister, Rishi Sunak, called the general election for 4 July. Subscribe for more news https://lnkd.in/d94JgWBU Source The Guardian #fintech #acquisition #banking

It's complicated. Natwest. They USED to be called RBS Group, after they were taken over by... Royal Bank of Scotland. Throwing Hedge-Fund-Henrys out of their palatial private offices, Lear Jets, Grand Prix Cars, Red Arrows, all that jazz. Anyway, RBS Group, they nearly went bust but Alastair Darling, (who used to be a Marxist but ended up in the House of Lords), he took them over, by making sure half of it, was owned by the UK Taxpayer. Keeping up? Cost a lot but it allowed RBS to keep their VAST village at Gogarburn outside Edinburgh, obviously, not as big a cheese and certainly not be as Scottish, as they once were. There would have to be a name change. It's always a good approach. Still following? So, Natwest, THEY are the Big Firm now and OWN Royal Bank of Scotland. There's going to be an opportunity to buy them back, from the UK Public and sell them back, to the erm...UK Public. Kapiche? A bit like the 'Tell Sid' power grab, on erm...Power, which let your Gran be a stock market gambler and went on to made UK Power the most uhm...expensive in Europe. It might sound like 'buying back what you already own' but trust me, when one of the 'Big Four' Auditors get their hands on it, it'll be a more simpler and more glossier opportunity than this. They'll need a Slogan and a hashtag though. It sounds fabulous.

A look 👀 at some of the transactions in FY24 for the North West Strategic Finance team at Virgin Money #strategicfinancenorthwest #acquisitionfinance #mergerandacquisition #corporatefinance