Britain's competition watchdog has launched an investigation into Nationwide's £2.9bn takeover of Virgin Money, examining potential antitrust concerns.
The Competition and Markets Authority (CMA) confirmed the investigation on Friday, setting July 26 as the deadline for its initial decision.
The investigation by the Capital Markets Authority will assess whether the merger could reduce competition within the banking sector. The regulator's options include completing the deal after an initial two-month review or extending the investigation for a more detailed examination. Interested parties are invited to submit their views on the acquisition by June 14.
Nationwide agreed to acquire Virgin Money earlier this year in an all-cash deal, marking the largest takeover in the UK banking sector since the financial crisis. Virgin Money shareholders, including Sir Richard Branson's Virgin Group, recently approved the takeover through a shareholder vote. However, some Nationwide members expressed dissatisfaction with being excluded from the decision-making process. Debbie Crosby, CEO of Nationwide, confirms that the majority of members support the deal.
As part of the CMA's review, comments will be sought from major competitors such as Barclays, Lloyds, NatWest, HSBC and Santander. Nationwide's building society rivals, including Skipton and Coventry, are also expected to provide input.
The CMA can investigate any merger in which the target company generates annual revenues exceeding £75 million. Virgin Money, which had revenues of £1.8bn last year, has surpassed this threshold.
Under the leadership of chief executive Sarah Cardell, the CMA has not frequently reviewed bank mergers because of their rarity. The last such review occurred in 2019, when OneSavings Bank's acquisition of Charter Court Financial Services was examined, focusing primarily on the buy-to-let mortgage market. The deal was approved after a preliminary investigation.
CMA approval is a stipulated condition for the completion of the merger, as set out in the recent merger documents from Nationwide and Virgin Money.
This CMA investigation will be closely watched by industry stakeholders, as it will determine whether the merger will proceed and what implications it may have for competition within the UK banking sector.