IT’S always a stressful time for customers when a bank decides to close a local branch or, as is the case with Virgin Money, merge with a competitor. For customers of the Clydesdale and Yorkshire banks, it must seem like déjà vu as it wasn’t that long ago that Virgin agreed to a £1.7 billion takeover by the owner of the two institutions that led to the loss of more than 1,500 jobs.

On that occasion, the venerable Clydesdale and Yorkshire brands – both established in the 1800s – disappeared. And now, having just got used to the bright red branding of Virgin Money, customers will be banking with Nationwide Building Society, should they choose to remain with the enlarged entity.

Nationwide may not have the same “in your face” branding as Virgin Money, but it has an impeccable pedigree having been established nearly 150 years ago and its current advertising campaign puts a strong emphasis on its high street network, pledging that everywhere it has a branch, it will retain a presence there until at least the start of 2028.

Nationwide agrees terms for £2.9bn bid for Virgin Money

Today’s second-half results from Virgin Money don’t shy away from the fact that the lender is in the midst of a £2.9 billion takeover by Nationwide – although it should be noted that the Competition and Markets Authority recently revealed it is investigating the takeover. The deadline for responses is today although it is tomorrow but it is still expected that the deal will complete towards the end of 2024.

Meanwhile, Virgin Money’s chief executive David Duffy is upbeat, pointing to an 18% hike in pre-tax profits at £279 million for the half-year ending March 31. However, Virgin Money cautioned it is braced for its net interest margin to be lower over the second half, ahead of expected interest rate cuts and the current competitive backdrop in UK banking.

“Over the first six months, we have continued to deliver on our strategic ambitions in line with expectations,” Mr Duffy noted. “While we expect there to be headwinds through the second half of the year, we remain well placed to deliver growth in our target segments.”

It is also encouraging that Virgin Money generated net interest income of £2.3bn in the six months, up from £1.7bn in the same period last year.

Total customer lending was 0.3% higher at £72.7bn in the first half. Notable expenditure included £33m from restructuring activities and £15m related to a new financial crime prevention programme.

However, mortgage balances dipped 2% in the lender’s first half to £56.6m, which Virgin said reflected a “subdued market for completions”.

For Virgin Money, Nationwide and other banks with a traditional high street presence, positive results don’t alter the fact that banking is changing to embrace new and emerging technology, and evolving business models. Challengers have moved in, their online-only model popular with younger people who are at ease using apps.

The Virgin Money-Nationwide merger will by no means be the last.