Nationwide’s £2.3bn takeover gain prompts criticism of Virgin Money bosses

A picture


Nationwide building society has revealed a £2.3bn gain from its takeover of Virgin Money, prompting accusations that Virgin’s bosses decided to “take the money and run” after losing faith in the ex-chief executive David Duffy.The building society’s bosses hailed the terms of the deal on Wednesday, as it published its final set of results as a standalone brand.Although the £2.8bn it paid for Virgin Money represented a premium on the target-bank’s share price – and its £2bn market valuation prior to the bid, according to Guardian calculations – it ended up being a “significant” discount compared with the actual value of Virgin Money’s assets.

Those assets are worth £5.1bn, Nationwide said, weeks after the deal completed in October.That represents a £2.3bn gain on the purchase price, which is even higher than the £1.5bn gain it had previously forecast.

“I don’t think there was any surprise,” Nationwide’s chief executive, Debbie Crosbie, said.“Certainly wasn’t any surprise for us.It was very thoughtful and very considered, and certainly on the Virgin Money board, they would have been very, very aware of this, as all of their competitors would have been about where they were trading.”Investors and bosses have long bemoaned the floundering market valuations of UK banks on the London Stock Exchange.However, some analysts say the discounted sale price was also a sign that bosses had given up on Duffy and the 29-year-old bank.

“I think it highlights that the Virgin Money board didn’t have faith that the CEO’s plan to generate higher profitability from the business to support a higher standalone valuation was going to be successful, so they decided to take the money and run,” Gary Greenwood, a banking analyst at Shore Capital, said.“They were struggling to deliver growth, particularly in mortgages, and were suffering from a funding disadvantage versus larger banking peers, which meant they had thinner margins.“They also kept disappointing on below-the-line costs, noting management had only recently announced another [plan] to invest a further £130m in cybersecurity, which had not been expected by the market and so was not in forecasts.Consequently, the profits they generated were well below where they needed to be.”Virgin Money bosses were due to share a £6m payout as a result of the deal, after accumulating stock through years of service at the bank, which was co-founded by the billionaire Sir Richard Branson in 1995.

That included the head of Virgin Money’s legal team, James Peirson, who was due a £691,812 windfall, and the chief financial officer, Clifford Abrahams, who was set for a £415,494 payout.Duffy, who resigned in October as part of the takeover agreement, was due to take the lion’s share of the windfall, gaining about £3.5m from the buyout of his nearly 1.6m shares.Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionBranson, who was Virgin Money’s largest shareholder and had backed the deal, will experience the biggest windfall of £724m.

That includes £414m from his 14.5% stake.However, it also accounts for the £310m that Nationwide has agreed to pay for the use of the Virgin Money brand, a sum that includes £15m in annual royalties for the first four years, as well as a £250m exit fee, which will lead to the name disappearing from UK high streets within six years.However, Crosbie said the £2.3bn gain would still give Nationwide “significant headroom” to cover the costs of integrating the two businesses, as well as service and value for customers.

She hinted that could mean further payouts and competitive interest rates for account holders.Crosbie said: “You should expect to see a really great package announced at the full year … and we’re working hard to make sure that that’s as attractive as it can possibly be.”Her comments came as Nationwide published its half-year results, which showed that pre-tax profits fell 43% to £568m in the six months to 30 September.Bosses said this was due to falling interest rates, but also money spent on payouts and deals for customers.
A picture

Mo matcha mo problem? How to get your green tea fix in a global matcha shortage

It’s “bold, green and attractive”, has boomed in popularity in Australia and on social media, and there are reports of a global shortage. But are we actually running low on matcha – and what are some alternatives to get your green tea hit?Megumi Kanaike, manager of Sydney tea shop Simply Native, says suppliers of the Japanese ground green tea powder have placed limits on orders. She attributes the reported shortage to an “unexpected worldwide boom” in the popularity of a tea that is only harvested once a year in Japan.While matcha production has remained consistent, international demand, driven by social media, has prompted concerns about a shortfall.Kanaike says matcha sales have risen by an “insane” 250% over the past six months at her store

A picture

Rukmini Iyer’s quick and easy recipe for spiced roasted cauliflower with chickpeas, halloumi and lemony bulgur

An easy weeknight dinner, with enough for a lunchbox the next day, too. Chickpeas, halloumi and pomegranate are always a winning combination and were a constant on my summer table, but you’ll add plant points and an autumnal touch with the lovely, baharat-spiced cauliflower and hearty, lemon-spiked bulgur wheat base.If you don’t have baharat, substitute with ras el hanout or a few generous tablespoons of rose harissa instead.Prep 15 min Cook 25 min Serves 31 medium cauliflower, cut into medium florets, plus any young leaves400g tinned or jarred chickpeas, drained and rinsed1 red onion, peeled and cut into eight250g halloumi, cut into 2cm chunks2 garlic cloves, peeled and finely grated2 tbsp olive oil 2 heaped tsp baharat 1 tsp sea salt flakes ½ tsp caster sugar (optional)200g bulgur wheat 400ml hot vegetable stockJuice and finely grated zest of 1 lemon, plus 2 strips lemon zest2 tbsp extra-virgin olive oil Seeds of ½ pomegranate15g fresh mint, leaves pickedHeat the oven to 200C (180C fan)/390F/gas 6. Tip the cauliflower, cauliflower leaves, chickpeas, onion and halloumi into a large roasting tin, then mix in the garlic, olive oil, baharat, salt and sugar, if using

A picture

Rachel Roddy’s recipe for polenta with buttery garlic mushrooms | A kitchen in Rome

Polenta is occasionally known as pulenda. It’s a reminder that both the name and the cooking method has its roots in antiquity and in the Latin word puls, a blanket term for a universal method: long-cooked, semi-liquid dishes, or “mushes”, based on cereals or legumes. Which leads us to another nice word-link: puls is also the root of the word pulses. But back to antiquity, where the nature of the mushes depended on where in the world they were made, and what was available.The Guardian’s journalism is independent

A picture

The nut of the future! 17 delicious ways with pistachios, from cakes to salads to cocktails

Pistachio farmers are having a bumper year – and looking forward to many more. These recipes will help you make the most of the glutPistachios are booming. In California, which has overtaken Iran as the top exporter in recent decades, growers are expected to harvest 1bn lb (about 450m kg) of them this year, a figure that is projected to double by 2031.At a time when all forms of agriculture face stark choices because of climate breakdown, pistachio orchards are expanding: the trees are more drought-tolerant than many crops, including other nuts such as almonds. But if pistachios end up becoming the nut of the future, how will we cope with record-breaking harvests? For now, here are 17 delicious ways to use up your personal allotment of this year’s yield

A picture

The truth about salt: how to avoid one of the world’s biggest hidden killers

Most of us consume far too much, which can lead to high blood pressure, heart attacks and strokes. But there are some simple ways to retrain your palate and reduce your intakeLast Tuesday, I bought lunch on the go. I fancied something hot, tasty but healthy, so I chose a vegan ramen from the Japanese-inspired chain Wasabi. The soup was packed with turmeric noodles, vegetable gyozas, mushrooms, bean sprouts, pak choi, pickled ginger and sesame seeds, in a soy and miso broth. It was delicious

A picture

Notes on chocolate: why an advent calendar is such a sweet delight

Tasty ways to count down the days to ChristmasThe Guardian’s journalism is independent. We will earn a commission if you buy something through an affiliate link. Learn more.Once upon a time advent calendars were simply perforated windows you opened on to a festive scene, but now everything can be adapted, come this time of year, into an advent calendar. I even saw one for the Gilmore Girls the other day