Virgin Money has already spent £10 million on fees related to its takeover by Nationwide but the bill is expected to be “significantly higher” during the rest of the year.
Britain’s sixth biggest bank said the £2.9 billion acquisition was still on course to be completed in the last quarter of the year.
An offer document published in April estimated the total bill for City advisory fees to be close to £80 million with Nationwide spending £41.3 million and Virgin Money £38 million. City firms standing to collect the most include Goldman Sachs, JP Morgan, UBS, as well as legal and PR advisers.
A third quarter trading update today showed outstanding customer loans 0.7% lower that last year at £72.0 billion “reflecting lower mortgage balances and broadly stable lending balances...” Mortgages were 2.7% lower at £56.0 billion, “reflecting disciplined approach to trading to protect overall spreads.”
CEO David Duffy said “Our strategy remains on track, with financial performance in line with guidance. We delivered continued growth in deposits and unsecured lending in Q3 and remain focused on developing innovative new products for customers and maintaining good momentum into Q4. The acquisition by Nationwide is progressing as anticipated with the recent CMA clearance, and we expect it to complete in the final quarter of the calendar year.”
Nationwide announced the £2.9 billion bid in March triggering a revolt by some Nationwide members who petitioned for a vote on the deal.
The Competition and Markets Authority gave the takeover the go-ahead last month, concluding that the tie-up was a “relevant merger situation” that would “not give rise to a realistic prospect of a substantial lessening of competition”.
Today’s quarterly numbers are likely to be the last from the lender as an independent business before it is absorbed into Nationwide.
