Nationwide building society’s £2.9 billion takeover of Virgin Money is hitting the headlines as thousands of the society’s customers protest that they will not get a vote on whether it should go ahead.
Nationwide, which is owned by the 16 million customers who are members of the society, plans to buy Virgin Money to create Britain’s second biggest savings and loans group.
But some customers fear they will get a rum deal and that the money could be better spent on its current members.
The Give Nationwide Members A Say petition has close to 4,000 signatories. A survey by Nationwide at the weekend found 8 per cent were opposed to the takeover, 48 per cent were neutral and 44 per cent were in favour.
However, I think the buyout, which could be done and dusted by the end of this year, could mean better rates for Nationwide savers. And not before time — they have put up with mediocre offerings for years.
Takeover: Nationwide, which is owned by the 16 million customers who are members of the society, plans to buy Virgin Money to create Britain’s second biggest savings and loans group
Nationwide says Virgin Money profits will feed into the Nationwide Group and improve its financial strength. It says there are ‘compelling’ financial benefits which will mean better savings rates compared with the market average.
Let’s hope so. The average easy-access account pays 3.11 per cent according to rate scrutineers Moneyfactscompare.
But Nationwide pays 2.35 per cent at best — and that is only to those with £50,000 or more in its Instant Access Saver. For balances at £1 plus it is an even worse 2.25 per cent, rising to 2.3 per cent once your balance reaches £10,000.
On its one-year fixed-rate bond it pays 4.25 per cent, and it pays 4.5 per cent on its equivalent cash Isa. That, too, is below the average, which is 4.6 per cent and 4.51 per cent respectively.
Virgin Money, on the other hand, has offered consistently good rates since it burst onto the savings scene. Its fixed-rate bonds and Isas tend to be among the top payers.
It pays 4.65 per cent on its one-year fixed-rate bond and 4.76 per cent on its ordinary Easy Access Cash Isa — but the latter is on offer only to customers who have a Virgin Money current account.
Virgin Money’s variable rate easy-access account, which restricts the number of withdrawals you make each year, beats out Nationwide’s.
With Virgin’s Defined Access E-Saver you earn a headline rate of 4.51 per cent. If you make more than three withdrawals in a year, the rate drops to 2 per cent.
At Nationwide, the one-year Triple Access Online Saver pays a lot less at 4.25 per cent. Once you have made more than three withdrawals the rate goes down to 2.15 per cent.
The Nationwide high rate lasts for only a year — after which you are moved into an instant access savings account that pays 2.35 per cent at best.
The pair offer Isa versions of these accounts, with Virgin Money at 4.51 per cent, and Nationwide’s one-year Triple Access Online ISA at 4.25 per cent.
Let’s hope that, when they merge, Virgin Money takes a lesson from Nationwide on how to treat loyal customers.
Virgin Money savers with old accounts that are no longer on sale are paid as little as 0.25 per cent interest. Nationwide pays the same on its closed easy-access accounts as it does on its current Instant Access Saver.
sy.morris@dailymail.co.uk