A petition urging Nationwide Building Society members to vote on the proposed Virgin Money deal is gaining momentum, with nearly 1,000 signatures.
The petition demands that Nationwide's 16 million members have a say in the decision to acquire rival lender Virgin Money in a deal estimated at around £2.9billion. The campaign organiser presented the petition at Nationwide's headquarters on Thursday, encouraging other members to support the cause.
Mikael Armstrong, who initiated the petition on change.org, accused the lender of "rushing through a deal to fill the pockets of Virgin Money shareholders". Nationwide is poised to take over the smaller lender, which would result in the creation of Britain's second-largest savings and loans group.
This move will also significantly increase Nationwide's presence in business banking and inherit the old business of Northern Rock, which was nationalised during the financial crisis before being purchased by Virgin Money in 2012. Sir Richard Branson's Virgin Group, which still holds a 14.5% stake in the bank he founded in 1995, is expected to pocket more than £400million from the sale.
As a member-owned financial institution, Nationwide is accountable to its customers who hold bank accounts, savings and mortgages, unlike most UK banks which are shareholder-owned. Debbie Crosbie, Nationwide's chief executive, stated that the deal "strengthens" the group "and means we can offer more value and broader services for our current future members".
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Mr Armstrong is challenging Nationwide's decision, claiming it's not in the best interest of its members. "The board and management of Nationwide appears to be going to extraordinary lengths to rush through a deal to fill the pockets of Virgin Money shareholders with Nationwide members' capital, and without detailed due diligence and proper consideration at the expense of the society's members," he argued.
He added: "Nationwide members want and must be given a vote on the proposed takeover of Virgin Money. Denying the society's members, its own customers and owners, a vote on the deal is now an obscene show of arrogance."
While Nationwide isn't legally required to seek members' approval for such acquisitions, its rules do allow for a special general meeting if 500 members who've been customers for two years each pledge £50.
Mr Armstrong has launched the "Give Nationwide members a say" campaign, providing an email template for those demanding a vote on the Virgin Money acquisition. He believes a special meeting would "allow for a better understanding of the pros and cons of the deal and, after a suitable period of scrutiny, a member vote".
However, he's urging members to act before the end of Friday to prevent a "lock-out" period during which the building society can't call a meeting.
A spokesman for Nationwide said: “Nationwide’s board believes that the acquisition of Virgin Money offers compelling benefits for the building society’s current and future members. Virgin Money profits retained by the Nationwide Group will improve the financial strength of our Society.
“This means we will be able to provide a greater level of member financial benefits and incentives, including through better savings and mortgage rates compared to the market average. Nationwide has communicated regularly and openly with its 16 million members, including several letters and emails. It has also conducted widespread polling of its members, which has shown very strong support for the transaction.”
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