Nationwide puts 'efficiency' boss in at Virgin Money – are cuts coming?
Nationwide has finally got approval to finish its acquisition of Virgin Money – and a way to move into the greater banking market and diversify a little from mortgages.
As part of the recent acquisition, 62-year old David Duffy, the former chief executive and executive director of Virgin Money, the nation’s sixth-largest bank has stepped down, with Chris Rhodes taking over the role.
In 2018 Duffy was running Clydesdale Yorkshire Bank which bought Virgin Money for £1.7 billion, and then assumed its acquisition’s name. Speculation in The Times earlier in the year predicted that Duffy could well have earned £30 million during and following his tenure at the Newcastle-based bank, depending on the final agreement. The keen fitness enthusiast was not offered a job post-acquisition, which surprised a number of City commentators at the time.
Duffy is being replaced by Chris Rhodes – Nationwide’s CFO and leader of the lender’s Finance and Efficiency group, who has been tasked with identifying savings available to the combined group, which will mean a close look at Virgin’s 7,300 staff and cutting overlapping central functions. Rhodes was COO at Alliance & Leicester before its takeover by Santander.
Nationwide chair has Kevin Parry confirmed that the lender was already planning to merge the brands, “As we integrate Nationwide and Virgin Money carefully over time, the impact we have in communities across the UK, and the benefits we offer to members and customers, will only increase.”
Rhodes commented: "This is the start of an exciting new chapter for Virgin Money as it becomes part of Nationwide, creating the UK’s second-largest provider of mortgages and savings accounts. The combination will be a mutual with a wider range of products and able to invest more in customer service.”
Back in March, Nationwide confirmed a £2.9 billion cash bid for Virgin Money. By May, the Competition and Markets Authority (CMA) had launched an investigation to assess the merger's potential impact on consumer choice. The CMA later cleared the deal, stating that the transaction "does not give rise to a realistic prospect of a substantial lessening of competition." Shortly after, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) also approved the merger.
Virgin Money highlighted that the combination of the two businesses would create a "mutually owned, full-service organisation with enhanced investment in customer service and a wider range of products."
The merger will see Nationwide and Virgin Money with combined assets of approximately £336.3 billion and a lending portfolio of around £283.5 billion. Virgin Money will undergo a rebranding process over the next two years, but in the meantime, the bank reassured customers that it would be "business as usual," with no immediate changes to Virgin Money, Clydesdale, and Yorkshire Bank products or services.
Richard Branson is set to make £650 million on the deal, £400 million from his shares, and a £250 million break fee for when Nationwide stops licencing the Virgin brand.
