The Competition and Markets Authority has launched a 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 UK.
This has garnered a strong response from brokers with EHF Mortgages managing director, Justin Moy, speaking in defence of the acquisition.
“The amalgamation of these lenders won’t create a lender of the same size as the powerhouse that is Lloyds Banking Group,” he pointed out.
“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.”
A similar opinion was shared by Yellow Brick Mortgages managing director, Stephen Perkins, who said: “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 and, even if they do join up, Nationwide will still be some way behind the leviathan that is Lloyds Banking Group.”
Whereas Orchard Financial Advisers managing director, Ben Perks, believed two lenders with different skills coming together could lead to the creation of a "super lender".
“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.”
However, Release Freedom broker and director, Simon Bridgland, cautioned that the acquisition of any company by another usually leads to the best parts of the lesser company becoming tempered by the board of the dominant business.
“Hopefully this isn’t the case and Nationwide keeps the aspects of Virgin which made them attractive to their demographic,” he added.
The CMA’s deadline to announce whether the merger will be referred for a phase 2 investigation is July 26 2024.
Thanks to the Newspage community for sharing their thoughts with FTAdviser.
tom.dunstan@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
