Nationwide profits slipped by £200m to £2bn for the year to April it said today, one day after Virgin Money shareholders backed the £2.9bn takeover by the society.
That controversial deal, an unusual takeover of a listed bank by a building society has earnt fierce resistance from some members who have not been given a vote on the deal.
CEO Debbie Crosbie says members are more interest in the benefits they get from Nationwide than voting on the Virgin deal.
She added: “There is no requirement for a vote and the vast majority of our members are happy with that.”
To win them over, today the society launched a Member Exclusive Bond paying interest of 5.5% and other member benefits.
These include a “Fairer Share” £100 payment to members with a current account or mortgage and at least £100 in savings.It extended it promise to keep branches open to 2028 and says the fall in profits is down to the plan to return more benefits to members, of which there are 16 million.
Crosbie, formerly of Virgin Money, said: “I believe this deal offers an exciting opportunity to create a more diverse business that delivers even more value to our members and will strengthen Nationwide financially.”
That deal should complete by the end of this year. Nationwide believes it is getting Virgin Money on the cheap -- at far less than its net asset value. Critics say VM is a mish-mash of old lenders including Northern Rock and that problems are bound to lurk within.
The society insists it will remain financially stronger than the big banks even after the Virgin deal, and that it gives Nationwide a strong foothold in business banking.
“The risk to Nationwide is very low”, said Crosbie. “There is no issue about the quality of the assets.”
Yesterday Virgin Money shareholders including Richard Branson’s Virgin Group voted in favour of the deal. Sir Richard stands to pocket about £600 million.
Meanwhile, the campaign to Give Nationwide Members a Say” was scathing about the “Fairer Share” offer.
Mikael Armstrong, leader of the campaign, said:
“Never in the 250 year history of the building society movement was so much taken from so many by so few. The directors of Nationwide building society are refusing 16 million members a vote on the proposed takeover of Virgin Money, using a technicality to circumvent the law.
“With less than half supporting the deal - according to the society’s own extensive polling - today’s results will only compound the misery of members struggling to make ends meet during a cost of living crisis. Instead of offering members better rates on mortgages and saving accounts, Nationwide is hurting members everyday, hoarding cash to fund the acquisition of Virgin Money - that not a single member has voted for, and no other organisation wants to buy. “
