The CMA today announced the launch of its merger inquiry into Nationwide’s proposed acquisition of Virgin Money. It will examine whether the acquisition will lead to a significant reduction in competition in the banking sector. In plain English, whether the consumer is likely to get shafted.
The CMA’s deadline to announce whether the merger will be referred for a phase 2 investigation is July 26, 2024. We have no idea what a phase 2 investigation is, but we Googled it for you so the information is there for you do whatever you want with.
Newspage asked brokers if they feel Nationwide’s potential acquisition of Virgin Money would be good or bad news for the UK’s mortgage borrowers. We also asked some borrowers in Gloucester’s Kings Square what they thought. As expected, not one gave a toss.
Here’s what Riz Malik, director at Southend-on-Sea-based R3 Mortgages, and aspiring game show host, had to say:
“It was surprising that Nationwide swiped right on Virgin Money because they’re very different. In fact, 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.”
Ben Perks, managing director at Stourbridge-based Orchard Financial Advisers, agreed with Riz, to an extent at least, and then sensibly hedged his bets by saying it could go either way. Easy way out, Ben.
“Two lenders with different skills coming together could lead to the creation of a super lender, with a wider range of options available to punters. It could be a great disrupter within the industry and force other lenders to think differently. On the other hand, it reduces the number of lenders in the market and could encourage others to do the same. Less choice is ultimately a bad thing for borrowers.”
But Amit Patel, Adviser at Leicester-based mortgage broker, Trinity Finance, said it’s largely irrelevant as the combined outfit would still “be miles behind the behemoth that is Lloyds Banking Group”. In short, a lender already has the market in a stranglehold so this whole inquiry, along with this article, are pointless.
The CMA underestimate the radical indifference most people have towards the banking system and the institutions that operate in it. That indifference, that outright contempt, has a symbolic power that no corporate can compete with, even if we are left out of pocket.
