Union representatives have said they will be seeking urgent clarity over the future of Virgin Money's 3,500 Scottish staff following news that the banking group has provisionally agreed a £2.9 billion takeover offer from Nationwide Building Society.

Nationwide boss Debbie Crosbie, a former senior executive at Virgin Money forerunner Clydesdale Bank, announced yesterday morning that the building society is prepared to offer 220p for each share in Virgin Money, a 38% premium to the bank's closing price on Wednesday. A planned 2p dividend payment to Virgin Money shareholders would also go ahead.

Nationwide said its “Branch Promise” will be extended to Virgin Money, meaning it intends to retain a branch everywhere where the combined group is currently present until at least the start of 2026. However, this would be subject to "any relevant plans and proposals for branch closures that have already been approved by Virgin Money, and which are ongoing as at completion [of the acquisition]". 

READ MORE: Virgin Money warns further jobs will go under cuts plan

Virgin Money has slashed its branch network by around 30%, reducing the total to 91, and cut its office footprint by around 35% in a restructuring programme that was completed in the first quarter of this year. The group said in February that there would be “further opportunities for property rationalisation”, citing the example of its Glasgow head office consolidation.

Nationwide has 18,000 staff compared to 7,300 for Virgin Money, which was formerly the Clydesdale and Yorkshire banking group CYBG and rebranded after a £1.6bn takeover of Sir Richard Branson’s banking group in 2018.

Nationwide said it does not intend to make any material changes to the size of Virgin Money’s workforce - which includes about 3,000 people in and around its registered head office in Glasgow - in the "near term”. However, Unite industrial officer Debbie Hutchings warned yesterday of "further unease and anxiety about jobs and services" in the wake of the announcement.

“The Virgin Money workforce including those based at its [headquarters] in Glasgow have been through huge upheaval and uncertainty over recent years," Ms Hutchings said. "This stems back to the acquisition of the Clydesdale and Yorkshire Banking Group by Virgin Money in 2018 which has resulted in a significant number of jobs being lost along with banks disappearing from the high street and in rural communities across Scotland.

READ MORE: Nationwide boss returns to Glasgow roots with Virgin deal

“The latest development that the Nationwide Building Society are set to acquire Virgin Money will only cause further unease and anxiety about jobs and services across both these financial institutions.  We will be seeking urgently clarity and assurances from Nationwide over its future plans and Unite will be strongly defending all jobs, pay and conditions of our members in the event of any transfer.”

The companies have reached a preliminary agreement on the deal, with Nationwide now looking through Virgin Money’s books before making a firm offer. Sir Richard's Virgin Group Holdings, which has a stake of around 14.5% in Virgin Money, has said it will back the deal on the current terms.

If the deal goes ahead, the combined group will have the second-largest branch network in the UK behind Lloyds HBOS. It would also be the second-largest mortgage provider in the UK, overtaking NatWest, which has raised concerns from some commentators about diminishing competition in the mortgage market. 

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The Virgin Money brand will be phased out over time, but the offer on the table would see the two brands continue to be run as separate entities for the next few years. The Virgin Money brand, which is licensed from Virgin Enterprises, is due to be returned to the latter within six years.

"Importantly, Nationwide will remain a building society, and a combined group would bring the benefits of fairer banking and mutual ownership to more people in the UK, including our continuing commitment to retain existing branches, as part of our 'Branch Promise' and leading levels of customer service," Ms Crosbie said.

"We believe the combination would create a stronger and more diverse business that will be better placed to deliver value to our members and customers, both now and in the future."

The future of David Duffy, who joined Virgin Money as chief executive in June 2015, remains unclear. Shares in Virgin Money closed yesterday's trading 55.65p higher at 214.7p each, an increase of 35%.