City advisers in line for £80m from Virgin Money deal

CITY advisers are poised to make almost £80m from Nationwide’s planned £2.9bn Virgin Money takeover.

Nationwide expects to fork out £41m on fees and expenses in total, documents published yesterday show, while Virgin Money will spend £38m.

Bankers from Goldman Sachs and JP Morgan, who are working for Virgin Money, are expected to receive £30.5m of the pot. Nationwide is set to pay £15.5m for financial advice from UBS.

Nationwide is spending a further £12m on legal fees and £1.4m on PR advice.

A significant proportion of Nationwide’s expenses – around £10m – are costs related to paperwork filed with the Prudential Regulation Authority (PRA) and the Competition and Markets Authority (CMA).

The disclosure of the size of the fees is likely to reignite controversy over Nationwide’s refusal to give its members a vote on the deal.

The transaction has raised fears that Nationwide, led by chief executive Debbie Crosbie, is betraying its mutual roots by buying a high street bank.

The building society’s 16m ordinary members are to be denied a vote on a transaction that will reshape the mutual for generations to come.

Nationwide has said a member vote cannot be undertaken as it would breach the City takeover code rules.

Campaigners have been pushing for a say, with a petition calling for a vote attracting more than 3,000 signatures. Their dissatisfaction is heightened by the fact that Virgin Money shareholders – including Sir Richard Branson – will vote on whether to approve the deal.

Sir Richard is in line for £650m from the takeover, while the bank’s largely American and South African shareholders will benefit from the £2.20 a share deal.

Virgin Money’s directors have recommended the offer.

Some City advisers have said the takeover bid is too low.

Keefe, Bruyette & Woods last week said the offer was “inadequate for what is the leading quoted UK challenger bank” and that there were buyers better suited than Nationwide.

The investment bank said: “We would recommend Virgin Money shareholders vote against the current offer.”

The CMA and the PRA must both signal their approval for the merger before the tie-up can be completed.

Sir Richard is set to get around £400m from the share sale and a further £250m by offloading the Virgin brand rights for the bank to Nationwide.