Proposed takeover of Virgin Money by Nationwide is full of Red Flags 🚩

Count the 🚩 RED FLAGS with us, enough for an 18 hole golf course! (UPDATED WITH LINKS)

🚩 1. Nationwide buying Virgin Money @38% above market

🚩 2. Offer is still < book value given Virgin Money poor performance & prospects

🚩 3. Virgin Money is a Frankenstein bank with bad IT: 4 different banks, not integrated

🚩 4. Virgin Money ranks 15th / 16 for customer service

🚩 5. Virgin Money bad debts with provisions up significantly over the last year

🚩 6. Virgin Money (esp. Clydesdale) has a history of mis-selling: PPI, SME lending etc.

🚩 7. No other bidders for Virgin Money

🚩 8. Nationwide board is denying members a vote on the acquisition, as expected under law

🚩 9. Nationwide board hiding behind legal opinion that no one else has seen or can scrutinise

🚩 10. Nationwide board not sharing risks or downsides of the deal with Nationwide members

🚩 11. Nationwide board is misleading members. Nationwide will be objectively weaker due to the loss of members capital paid to Virgin Money shareholders.

🚩 12. Both boards tried and failed to rush it through over Easter holidays (courts were in recess)

🚩 13. Nationwide CEO (Debbie Crosbie) used to be Virgin Money COO. Effectively Crosbie is buying her old firm (Clydesdale), her old boss David Duffy gets to retire, and post NAB demerger shareholders get an exit

🚩 14. Duffy, Virgin Money CEO, expected to receive a £15M golden parachute

🚩 15. Sweetheart deal for Branson: Virgin Group gets an extra £250M “exit fee” + £15M pa thereafter

🚩 16. Remainder of Virgin Money mostly owned by a few Australian fund managers, so fate of proposed deal in the hands of a few (Virgin Money shareholders get to vote, Nationwide members do not)

🚩 17. Nationwide spinning their paid research to say members are in favour, while the data shows the majority don’t support or don’t understand what the deal will mean for them.

🚩 18. Advisors set to add £80M in deal fees. JPMorgan also advising Coventry acquisition of Co-op Bank. M&A activity and deal fees at an all time low, so desperate times, desperate measures: sell bad banks to safe building societies.

We’re sure there are more – let us know in the comments if you have more to add to the list!

Proposed takeover of Virgin Money by Nationwide is full of Red Flags 🚩

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to top