Virgin Money changes auditor amid Nationwide merger

Virgin Money UK PLC announced it has changed auditor amid its proposed £2.9 billion cash takeover by mutually-owned Nationwide Building Society.

Virgin Money said it recently finalised the appointment of Ernst & Young LLP (EY) as its auditors “following PricewaterhouseCoopers LLP giving notice that they would be resigning in light of potential conflicts arising from the possible acquisition.”

In a first-half trading update on Tuesday, Virgin Money said: “As previously announced, the boards of directors of Virgin Money UK PLC and Nationwide Building Society (Nationwide) have agreed the terms of a recommended cash acquisition of Virgin Money by Nationwide to be effected by means of a scheme of arrangement.

“Further to the update set out in the scheme document published by the company on 22 April 2024 in connection with the proposed acquisition, the Virgin Money board recently finalised the appointment of Ernst & Young LLP (EY) as Virgin Money’s auditors, following PricewaterhouseCoopers LLP giving notice that they would be resigning in light of potential conflicts arising from the possible acquisition.

“The group will announce its interim results for the six-month period ending 31 March 2024 on 13 June 2024, following the conclusion of EY’s review.

“Additionally, the company provides the following unaudited update on trading in H1 2024, ahead of the shareholder meetings to approve the scheme and related matters, which are scheduled to be held on 22 May 2024.”

Virgin Money added: “This announcement is not a preliminary statement of interim results. Due to the results presented in this update not having been subject to final review by the company’s auditors as would be required for a preliminary statement of interim results, adjustments could arise from the finalisation of the review.

“The announcement therefore contains some details that remain subject to finalisation of the review, which is reflected in the use of ranges for some quoted financial metrics.

“At this point, Virgin Money UK PLC confirms it is not aware of, nor been notified of, any matter which may result in the need to make a change to the information in this update in connection with EY’s review.”

Virgin Money said customer loans were stable in H1 at £72.7 billion “as 5% growth across target lending segments of business and unsecured lending was offset by lower mortgages balances.”

It said mortgages were 2% lower in H1 at £56.6 billion “reflecting subdued market” and that “customer demand has improved since the start of the calendar year, with application volumes higher in Q2 versus Q1.”

Business lending was 7% higher in H1 at £9.3 billion, unsecured lending increased 3% in H1 to £6.7 billion, and customer deposits were 2% higher in H1 at £68.2 billion.

In its outlook, Virgin Money said: “Following a strong H1, during the second half the group expects downward pressure on NIM relative to H1, primarily reflecting a lower expected contribution from cards EIR adjustments, and ongoing competition.

“The group also anticipates cost pressures from inflation and investment in H2, which will only be partially mitigated by the ongoing cost savings programme …”