The bank Nationwide Building Society, which is based in the United Kingdom, plans to acquire retail lender Virgin Money.

The boards of directors of the mentioned organizations last Thursday, March 7, announced that a preliminary agreement had been reached on the implementation of the deal. The bank intends to acquire the retail lender for $2.7 billion. According to preliminary information, as a result of the implementation of the deal planned for the near future, the financial institution-buyer will become the second-largest provider of mortgages and savings in the United Kingdom.

Nationwide Chairman Kevin Parry, in a letter to members ahead of the acquisition of Virgin Money, said that combining the two businesses would form a more profitable position for the bank. In this context, the advantages of the deal were highlighted in terms of the prospects for continuing to provide eligible members of the corporate community with financial institutions throughout the United Kingdom. Kevin Parry also said that the acquisition of Virgin Money will have positive consequences for the formation of more profitable solutions for the bank’s mortgage lending and savings. Furthermore, the deal will enhance the quality of customer service of the financial institution. It is worth noting that this activity of the bank already belongs to the category of first-class.

Kevin Parry also stated. that Nationwide will strive to expand the list of products and services offered to customers and clients. In this context, Virgin Money business banking services were mentioned, which are offers of a high level of quality, confirmed practically. After the implementation of the deal, consumers will be offered the benefits of fair banking in the financial services sector and mutual ownership. These solutions will be available to a large customer base in the United Kingdom.

Nationwide, as a result of the acquisition of Virgin Money, will be able to expand the scale of lending. The range of deposit offers will also be expanded.

Virgin Money is the sixth largest retail bank in England in terms of such an indicator as the volume of assets. Currently, the number of the financial institution’s customer base is about 6.6 million people. The total volume of loans in this case is around $93.1 billion.

Virgin Money’s share of the UK credit card market is 8.4%. The bank’s balance sheets for lending to small businesses are $11.5 billion.

The deal is a rare example of an acquisition being carried out by such a public company as Nationwide.

Benjamin Toms, an analyst at RBC Capital Markets, said that the business agreement between the two banks could be a catalyst for increased competition in the mortgage and savings market in the United Kingdom. Also, according to the expert, after the implementation of the deal, Nationwide’s share in the mortgage market may increase to 15.7%. Currently, the corresponding figure is 12.2%.

It is worth noting that at present, consumers of financial services are interested in more acceptable interest rates on loans and payment terms. Against this background, the demand for alternative offers outside the traditional banking system is increasing. For example, in the United States, currently, more than 45% of mortgages and 41% of auto loans are issued by organizations that do not belong to the category of standard, conservative financial institutions.

As we have reported earlier, Capital One to Acquire Discover Financial Services.