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CMA inquiry: Nationwide acquisition of Virgin "could be a positive for borrowers if it sparks more price competition"

Journalist: Riz Malik

ended 31. May 2024

The CMA today announced the launch of its merger inquiry into Nationwide's proposed acquisition of Virgin Money. They will examine whether the acquisition will lead to a significant reduction in competition within any market in the United Kingdom. The CMA's deadline to announce whether the merger will be referred for a phase 2 investigation is July 26, 2024. Newspage asked brokers if they feel Nationwide's acquisition of Virgin Money will reduce competition in the UK mortgage market, whether it could see more lenders pursue similar mergers and under what conditions this potential acquisition could benefit customers? Their thoughts are below.

6 responses from the Newspage community

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Riz Malik
Independent Financial Adviser at R3 Wealth
It was surprising that Nationwide swiped right on Virgin Money as the two lenders are very different. As lenders, they're chalk and cheese. However, if this acquisition enables the larger building society to challenge the Lloyds Banking Group's market dominance, that could be a positive for borrowers if it sparks more price competition. This could be a rare instance of less competition driving better outcomes for consumers as two big beasts lock horns.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
I don’t believe this proposed acquisition will have any significant impact on market competition as both lenders serve different elements of the market. Borrowers, as a result, are unlikely to lose out. Even if they do join up, Nationwide will still be some way behind the leviathan that is Lloyds Banking Group.
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Justin Moy
Managing Director at EHF Mortgages
The amalgamation of these lenders won’t create a lender of the same size as the powerhouse that is Lloyds Banking Group. I believe having a few less lenders in the market will actually help borrowers and brokers if it creates the infrastructure to bring better products to market. The customer bases of each lender are different, with a heavy skew to small business owners at Virgin and more new builds at Nationwide, which may be the primary reason for this collective. I don’t see any major issues with this acquisition and it may do the industry some good.
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Ben Perks
Managing Director at Orchard Financial Advisers
Two lenders with different skills coming together could lead to the creation of a Super Lender, with a wider range of options available to clients. It could be a great disrupter within the industry and force other lenders to think differently. On the other hand, it reduces the lenders in the market and if it works could encourage others to do the same. Less choice is ultimately a bad thing for borrowers.
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Simon Bridgland
Director at Charwin Private Clients
Although presented in a very positive light, the acquisition of any company by another usually means the best parts of the lesser company become tempered by the board of the dominant business. Hopefully this isn’t the case and Nationwide keep the aspects of Virgin which made them attractive to their demographic.
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Amit Patel
Adviser at Trinity Finance
The proposed merger of Nationwide and Virgin Money will not reduce competition in the mortgage market as both lenders have a different proposition. In either case, they will still be miles behind the behemoth that is Lloyds Banking Group.