The nation has poured £650 million into Virgin Money’s Clydesdale Bank unit to keep the lender financially strong, the Mail on Sunday can reveal.
The major capital injection follows the building society’s £2.8bn takeover of Virgin Money, creating Britain’s second largest savings and loan group.
The nation took a £2.3 billion higher-than-expected profit on the deal – the biggest in banking since the financial crisis – as Virgin’s board is expected to sell off Money on low prices.
The cost is very low, and the national cost of Virgin’s assets is lower than expected.
But it has now emerged that Nationwide injected fresh cash into Women’s Money to prevent Clydesdale Bank’s capital ratios from falling as a result of the sale.
The majority of the £650 million infusion was made to bring Clydesdale’s accounting practices into line with the best practice used by Nationwide.
Director: Debbie Crosbie
The rest of the injection covered the £250 million fee that Sir Richard Branson will receive for continuing to use the Lady name over the next four years. Information on financial support is included in the information under the country’s half-year results.
Debbie Crosbie, the chief executive of the building society, has hailed Virgin Money’s role as a ‘unique platform’, one that integrates into business finance, makes finance different and ’empowers the financial side’.
A ‘corrective’ and ‘measurable’ approach to introducing Women’s Money has been promised. The country has yet to say how much it will cost to consolidate Virgin Money’s IT systems and improve its customer service.
Clydesdale’s capital ratios – a key measure of financial strength – are among the lowest in the banking sector, but National is among the highest.
The combined group is now the UK’s second largest provider of home loans, accounting for £1 in every £6 of mortgage balances, and £1 in £8 of commercial deposits.
The country approved a £650 million bailout.
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