Irish banker David Duffy is set to step down as chief executive of Virgin Money following its planned takeover by fellow UK lender Nationwide Building Society, with a pay-day of as much as £15.3 million (€17.9 million).
Both lenders said on Thursday their respective directors have unanimously agreed to recommend Nationwide’s proposed £2.9 billion takeover of Virgin Money to create the second-largest mortgages and savings business in that market.
The deal, which is subject to the approval of Virgin Money shareholders and regulatory authorities, will see investors in the lender receive £2.20 in cash per share, including a dividend of 2 pence. This is in line with initial terms outlined earlier this month.
Mr Duffy is a former AIB chief executive. He quit the Irish lender, where top executive salaries have been capped at €500,000 since the financial crisis, in 2015 for Clydesdale and Yorkshire Bank Group (CYBG), then a subsidiary of National Australia Bank. He led the initial public offering of CYBG in early 2016 and a merger two years later with Virgin Money.
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Virgin Money confirmed Mr Duffy has almost 1.59 million shares in the company, equating to a 0.12 per cent direct interest. In addition, Mr Duffy has been granted awards of some 5.38 million shares that had not yet been vested, it said in a stock exchange filing accompanying the takeover deal.
The prospectus for CYBG’s IPO in 2016 stated that stock awards would vest in the event of a change of control of the company “to the extent the performance condition has been met up to the event in question”, subject to a degree of discretion by the remuneration committee. Still, it is unlikely that the the maximum number of unvested stock awards will vest, according to observers.
A spokesman for Virgin Money declined to comment on how much Mr Duffy stands to receive from the deal.
The Nationwide bid was priced at a 38 per cent premium to Virgin Money’s “undisturbed price” as of March 7th, before the tie-up talks were disclosed.
“The boards of Nationwide and Virgin Money believe that the acquisition will combine two complementary businesses, creating the second largest provider of mortgages and savings in the UK,” the companies said in a statement.
Nationwide is the UK’s third largest mortgage provider and holds almost 1 in every 10 pounds saved in the UK, as well as one in 10 of the UK’s current accounts.
Nationwide also confirmed that its chief financial officer, Chris Rhodes, will become chief executive of Virgin Money after Mr Duffy retires.
Muir Mathieson, Nationwide’s deputy chief financial officer, will become CFO of Nationwide. Both would report directly into Nationwide chief executive Debbie Crosbie.
Nationwide also confirmed it would eventually phase out the Virgin Money brand.
“This acquisition strengthens Nationwide and means we can offer more value and broader services for our current and future members. More people will experience the benefits of mutual ownership and the customer-focused approach of a building society,” Ms Crosbie said.
Nationwide is the world’s largest member-owned building society, with more than 17 million customers. It has more than 18,000 employees. Virgin Money has a workforce of about 7,300. – Additional reporting, Reuters
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