Flaks Call It Right On Nationwide Deal (for now)

Nationwide Building Society today formalised its £2.9 billion takeover of Virgin Money.

I hate this deal. I hate everything about it.

Not least that members of a supposedly mutual organisation didn’t get to vote on it.

But also because I think it is a huge and unnecessary risk to take for the world’s biggest building society – a business that exists as a permanent brake on beastly banks.

The banks have to compete with it. What is Nationwide doing buying one of them, especially a business as messy as Virgin Money (trust me, I’m a customer).

I have not been alone in my view. In the FT Philip Augar – a proper expert, not just an angry hack, wrote: “Academic studies show that most big mergers fail to create value for acquiring shareholders and under the circumstances, the building society’s members should be offered the opportunity to approve a deal. From such a strong starting position, Nationwide, and indeed the whole mutual model, have a lot to lose.”

Exactly. A lot to lose and not that much to gain. Even if this deal looks good in 12 months time, which it might, that isn’t the point.

What about in 20 years? 30?

In City AM Mark Kleinman called it “astonishing” that members didn’t get a vote on the deal.

The PR folk overseeing the deal – Finsbury, now known as FSG – fought their corner hard, but I was still left shouting stuff like – knock it off! I’ve been writing about Nationwide since about 1995. I know what it does.

The flaks insisted that only journalists had this level of opposition to the deal. Members were fine with it, they said.

I was so irked I had a poll done. Find Out Now asked 1000 members what they thought. Irritatingly, 50% of them support the deal, and only 6% are actively opposed.

Asked if a building society should be able to use members’ money to buy companies listed on the stock market, more say yes, 31%, than no, 24%.

So the flaks are right, that serious objections are limited to a few shouty hacks.

This doesn’t make us wrong. Though it does mean we lost. My irritation levels remain elevated.