The chief executive of Nationwide Building Society has hit back at criticism of her ambitious takeover of the high street bank Virgin Money, and defended her refusal to grant the mutual’s members a vote on the deal.
Debbie Crosbie said only a “tiny minority” of members were against the plan, which would be the biggest merger of two high street lenders since the financial crisis.
“I don’t see it as aggressive, I see it as the right way to make society more sustainable and I think there’s huge support for expanding the mutual sector,” said Ms Crosbie.
Virgin Money is led by former AIB chief executive David Duffy. He could be in line for a £15.3 million (€17.9 million) pay-day if the purchase goes ahead.
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The Labour Party has previously pledged to double the size of the UK’s mutual sector if it forms the next Government, with a general election now set for July 4.
Under the leadership of Ms Crosbie, Nationwide has sought to differentiate itself from the big banks by highlighting its mutual credentials, meaning it is owned by customers rather than shareholders.
[ Irish banker Duffy eyes up to €17.9m pay-day in Virgin Money takeoverOpens in new window ]
The building society distributed a total of £344 million to eligible customers in the year to April and has pledged to keep branches open until 2028.
But members have been attempting to force a vote on the £2.9 billion takeover, arguing that the mutual must do more to convince them it would lead to better deals for customers.
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Nationwide said it had no legal obligation to put the decision to its 16mn members and that out of 30,000 customers surveyed, less than 8 per cent were negative about the deal. The building society is expected to complete the £2.9bn takeover by the end of the year.
Crosbie’s comments came as Nationwide reported pretax profits of £1.8 billion in the year to April 4, down from £2.2 billion the previous year, as it set aside £127 million for liabilities and charges.
Revenues were broadly flat at £4.8 billion as the windfall from the impact of rising interest rates was offset by competition in the mortgage market.
The lender said £99 million of its provisions would be used to cover litigation costs linked to its discussions with authorities about historical tax matters that took place in 2018 and 2019, and £24 million would be used to cover potential remediation costs linked to customer complaints.
Chief financial officer Chris Rhodes said the £24 million was a “really small charge” linked to customers being due a refund after administrative mistakes were picked up by quality assurance tests.
Crosbie quashed speculation that Nationwide could attempt another takeover in the face of speculation that high street lender TSB, which she led before joining Nationwide, could be put up for sale by the Spanish bank Sabadell.
“At the moment, we have no other plans for any big acquisition,” she said. “We’ll be focusing primarily on the one that we’ve got on our plate.” – Copyright The Financial Times Limited 2024
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