The CMA today announced the launch of its merger inquiry into Nationwide’s proposed acquisition of Virgin Money.
The inquiry will examine whether the acquisition will lead to a significant reduction in competition within any market in the United Kingdom.
The CMA’s deadline to announce whether the merger will be referred for a phase two investigation is 26th July 2024.
In light of this, Newspage asked brokers if they feel Nationwide’s acquisition of Virgin Money would reduce competition in the UK mortgage market, whether it might see more lenders pursue similar mergers, and under what conditions this potential acquisition could benefit customers.
Reaction:
Riz Malik, director at R3 Mortgages:
“It was surprising that Nationwide swiped right on Virgin Money as the two lenders are very different. As lenders, they’re chalk and cheese.
“However, if this acquisition enables the larger building society to challenge the Lloyds Banking Group’s market dominance, that could be a positive for borrowers if it sparks more price competition.
“This could be a rare instance of less competition driving better outcomes for consumers as two big beasts lock horns.”
Stephen Perkins, managing director at Yellow Brick Mortgages:
“I don’t believe this proposed acquisition will have any significant impact on market competition as both lenders serve different elements of the market.
“Borrowers, as a result, are unlikely to lose out.
“Even if they do join up, Nationwide will still be some way behind the leviathan that is Lloyds Banking Group.”
Justin Moy, managing director at EHF Mortgages:
“The amalgamation of these lenders won’t create a lender of the same size as the powerhouse that is Lloyds Banking Group.
“I believe having a few less lenders in the market will actually help borrowers and brokers if it creates the infrastructure to bring better products to market.
“The customer bases of each lender are different, with a heavy skew to small business owners at Virgin and more new builds at Nationwide, which may be the primary reason for this collective.
“I don’t see any major issues with this acquisition and it may do the industry some good.”
Ben Perks, managing director at Orchard Financial Advisers:
“Two lenders with different skills coming together could lead to the creation of a Super Lender, with a wider range of options available to clients.
“It could be a great disrupter within the industry and force other lenders to think differently.
“On the other hand, it reduces the lenders in the market and if it works could encourage others to do the same.
“Less choice is ultimately a bad thing for borrowers.”
Simon Bridgland, broker and director at Release Freedom:
“Although presented in a very positive light, the acquisition of any company by another usually means to best parts of the lesser company become tempered by the board of the dominant business.
“Hopefully this isn’t the case and Nationwide keep the aspects of Virgin which made them attractive to their demographic.”
