VOTE now! Proposed take over of Virgin Money - Nationwide members should be given a vote

26left

I'm really unhappy about Nationwide management running roughshod over their members (we the customers own the building society as it's a mutual), trying to push through a deal to buy Virgin Money.

My quick take:

• Nationwide management have proposed a takeover of Virgin Money
• Terms of the deal have been agreed, but it is yet to complete. If you want a say, call for a vote TODAY.
• A simple, but flawed, rationale has been put forward by Nationwide management
• Virgin Money shareholders will be required to vote on the deal (which needs a 75% majority)
• But Nationwide management are denying their members – the owners of the building society – a vote

I don't think that's right or fair (and nor do members of the House of Lords like Baroness Altmann)  - so if you're a Nationwide customer, please could you...

Sign the petition calling for a vote on the deal

Under Section 14 of the Nationwide Memorandum and Rules, 500 members can call for a Special General Meeting and table a vote.

The detailed case for and against a deal from a member perspective has not been made clearly by Nationwide management.

The case for Virgin Money shareholders and Nationwide management however is clear:

• Virgin Money shareholders will receive a 40% premium on the share price. A total of £2.9 billion of Nationwide member capital will be spent on buying the Virgin Money group.
• Richard Branson is set to receive almost £700 million – partly due to his share ownership, but also for a £250 million exit fee, and £15 million in annual royalties for further use of the Virgin Money brand (which will be retired later anyway).
• David Duffy, the Virgin Money CEO is expected to retire with a golden parachute of £15 million
• Debbie Crosbie and the senior team at Nationwide will undoubtedly receive bonuses and larger salaries for presiding over a larger, much more complex group

Meanwhile the case for Nationwide members is less clear:

• Virgin Money will add customers that are familiar to Nationwide who have mortgages and deposits. But it will also add credit cards and business accounts which traditionally Nationwide has not offered – for good reason. Business banking and credit cards are not Nationwide's purpose or competence as a building society.
• £2.9bn of Nationwide member capital will be used up to buy Virgin Money, but that wont be the total cost of the takeover. Even more money (i.e. member capital) will be spent on paying off Branson, integrating and fixing Virgin Money. Why else would Virgin Money be trading at a discount to the book value of its equity – if it wasn’t a business with significant issues?
• The Virgin Money business is a hodge-podge of products and customers brought together from several acquisitions (eg Northern Rock, Clydesdale and Yorkshire). You only need to visit the Virgin Money customer online banking sign-in page to see that these businesses have NOT been integrated – there’s a separate login for each product.
• It will take years and £millions for Nationwide to integrate and fix Virgin Money's mess over the years to come if this deal goes ahead. Member capital will be spent not on better products and services, but instead be diverted into the pockets of consultants.
• Virgin Money has one of the lowest customer satisfaction scores in retail banking ranking 15th out of 16 – so there are clearly problems lurking under the surface.

Why is Nationwide buying Virgin Money? This is a deal that rewards both sets of executives and Virgin Money shareholders at the expense of Nationwide members. Bigger isn’t necessarily better – unless you’re a boss.

• Debbie Crosbie has been at Nationwide for less than 2 years. She has been a commercial banker for most of her career and will likely return there – she does not come from a mutual background. She used to work at Clydesdale and later CYBG before it was rebranded Virgin Money, with David Duffy.
• Presiding over a larger, more complex business will undoubtedly mean more pay for Crosbie and her team, and more money for her old friends and Clydesdale colleagues at the now struggling Virgin Money
• The member Fairer Share payment will clearly be lower because of the costs of doing this deal. An enlarged banking group will have to reserve and spend more of members’ capital. Think of it this way: instead of an extra £200 in every members’ pocket (3.4 million members received a Fairer Share payment in 2023), that money is going immediately to billionaire Richard Branson. And even more of it will be spent in the long run on integrating and fixing Virgin Money, a badly valued commercial bank, when it could have been spent on improving Nationwide’s existing products, services and returned to its owners – its members.

So please, if you're a Nationwide member...

Sign the petition calling for a vote on the deal

Thank you!

friolento

Although a Nationwide  member for decades, I am in no position to judge what the pros and cons of this takeover are. It's the job of the Nationwide Board to decide. If there was a vote, I wouldn't vote in it. I reckon there will be millions of other members in the same situation.

I also won't sign the petition as I don't want Nationwide to spend money responding to the petition.

subjecttocontract

I'm a Nationwide member, have been for quite a while but couldn't care less what or who they decide to buy. I have accounts with them because of what they offer. If the offer stops I'll take my business elsewhere as I have no loyalty to any bank. 

However, I do understand that others feel quite annoyed about the decision to buy. It's a free country and they can hold that view and I wish them luck in achieving the result they are seeking.

eskbanker

The flipside of the argument:

Here’s the practical problem, though: even if Nationwide’s directors were sticklers for democratic governance, it’s hard to see how they could make a vote happen under current rules. The main problem is the 1986 Building Societies Act, which doesn’t require a society to hold a vote if it is buying a business that looks roughly like its own.

Virgin fits the description. It has a sideline in business banking, which is one of the attractions for the acquirer’s board, but 90% of its assets are residential mortgages, which is what Nationwide does. Special votes under the law are reserved for life-or-death matters such as demutualisation, which Nationwide obviously isn’t proposing.

Could Nationwide hold a vote on the deal regardless? That’s where another obstacle arises in the form of the Takeover Panel, which oversees bids for listed companies and sensibly looks to protect a target’s shareholders from time-wasters, chancers and all manner of uncertainties. If a bidder makes a firm offer, it’s meant to be on the hook.

Rule 13 of the Takeover Code seems critical: a bidder cannot insert conditions into an offer that “depend solely on subjective judgments”. Since Nationwide is not required by law to hold a binding poll of its members, doing so would probably be deemed “subjective” – the bidder’s board would be doing something it doesn’t have to do. It would be different if the 1986 act required a vote, but it doesn’t.

https://www.theguardian.com/business/nils-pratley-on-finance/2024/mar/21/nationwide-members-deserve-a-vote-on-virgin-deal-but-wont-get-one

masonic

There was a previous thread started less than a week ago where all of these arguments were thrashed out, but for some reason it got deleted. IIRC correctly at that time that petition had 3 signatures, so it is doing rather better than I'd imagined it would. I hope all those who have signed read the bit about paying a deposit.

FWIW, as a member I do not want there to be a vote. The last thing any mutual organisation needs is for its strategy to be dictated by members of the general public.

allegro120

friolento said:

Although a Nationwide  member for decades, I am in no position to judge what the pros and cons of this takeover are. It's the job of the Nationwide Board to decide. If there was a vote, I wouldn't vote in it. I reckon there will be millions of other members in the same situation.

I also won't sign the petition as I don't want Nationwide to spend money responding to the petition.

The same here.  Few decades of membership doesn't mean I have an expertise to influence decisions like this. I'm a saver, not a banker.  It's up to the board to make strategic decisions. My position is simple - if they offer competitive products I will put my money there, if they don't I put my money elsewhere.  I have a number of dormant and active accounts with both, Nationwide and Virgin.  Currently I have funds in Virgin ISA and two Nationwide RSs, happy with all three.  Also opened Virgin 'defined" (5.11%) recently as a back up for falling rates, put £1 there as required

Wheres_My_Cashback

masonic said:

There was a previous thread started less than a week ago where all of these arguments were thrashed out, but for some reason it got deleted. IIRC correctly at that time that petition had 3 signatures, so it is doing rather better than I'd imagined it would. I hope all those who have signed read the bit about paying a deposit.

FWIW, as a member I do not want there to be a vote. The last thing any mutual organisation needs is for its strategy to be dictated by members of the general public.

I couldn't give a XXXX about the takeover.

 As for the deleted thread aren't petitions banned from here. 

masonic

Wheres_My_Cashback said:

masonic said:

There was a previous thread started less than a week ago where all of these arguments were thrashed out, but for some reason it got deleted. IIRC correctly at that time that petition had 3 signatures, so it is doing rather better than I'd imagined it would. I hope all those who have signed read the bit about paying a deposit.

FWIW, as a member I do not want there to be a vote. The last thing any mutual organisation needs is for its strategy to be dictated by members of the general public.

I couldn't give a XXXX about the takeover.

 As for the deleted thread aren't petitions banned from here. 

That would explain it. Shame the discussion couldn't have been left up. No doubt this won't be the last time a thread is started for this purpose.

Wheres_My_Cashback

masonic said:

Wheres_My_Cashback said:

masonic said:

There was a previous thread started less than a week ago where all of these arguments were thrashed out, but for some reason it got deleted. IIRC correctly at that time that petition had 3 signatures, so it is doing rather better than I'd imagined it would. I hope all those who have signed read the bit about paying a deposit.

FWIW, as a member I do not want there to be a vote. The last thing any mutual organisation needs is for its strategy to be dictated by members of the general public.

I couldn't give a XXXX about the takeover.

 As for the deleted thread aren't petitions banned from here. 

That would explain it. Shame the discussion couldn't have been left up. No doubt this won't be the last time a thread is started for this purpose.

Yes, but they always seem to be started by new posters who no doubt have underlying agendas and I would imagine that by permitting them MSE would open itself up to all sorts of problems. There are plenty of sites out there specifically for this type of thing.

masonic

mikael said:

Whoever started this thread obviously has great concerns like I do.

Yes, it appears they were concerned enough to set up a forum account to promote this petition.

Middle_of_the_Road

97 signatures so far. Seems like there are people not happy with this proposal.
Vote or not, they will do as they please, but good to see members challenging this already bloated society.