Virgin Money - which has a substantial Newcastle base and branches across the North East - is to be taken over by Nationwide Building Society in a deal worth around £2.9 billion.

Nationwide said it will keep a branch in each location where the combined group is present, until at least the start of 2028 – announcing that it has extended its branch promise by another two years, but the move will spell the end of the Virgin Money brand, with Nationwide planning to rebrand the Virgin Money business as Nationwide within six years, although it will keep the two brands initially.

Nationwide has made a 220p-a-share firm offer for Virgin Money, including a planned 2p-per-share dividend payout, which will now be voted on by Virgin Money shareholders.

Confirmation of the deal comes after the two companies reached a preliminary agreement earlier this month, with Nationwide having spent the past two weeks looking through Virgin Money’s books before making the firm offer.

Nationwide said: “Nationwide’s board agreed that a binding offer to acquire Virgin Money was in the best interests of the society and its present and future members, following full consideration and the appropriate due diligence, and after taking comments from members into account.”

Virgin Money chief executive David Duffy will stand down on completion of the deal, which is expected during the final three months of 2024, while Nationwide boss Debbie Crosbie will head up the enlarged group. Chris Rhodes, chief financial officer of Nationwide, will take on the position of chief executive of Virgin Money.

The planned takeover will bring together Britain’s fifth and sixth largest retail lenders, creating a combined group with around 24.5 million customers, more than 25,000 staff and nearly 700 branches.

Nationwide also stressed it will remain a mutual building society if the deal goes ahead and is given the green light by Virgin Money’s shareholders.

The society said it will not need to put the deal to a vote of its members, “having taken appropriate legal and financial advice”.

Ms Crosbie said: “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.”

Virgin Group Holdings, which has a stake of around 14.5% in Virgin Money, has given its backing to the Nationwide deal.

Shares in Virgin Money, which soared earlier this month on news of the deal, jumped another 2% on Thursday.

Mr David Duffy said: “The proposed combination with Nationwide presents an exciting opportunity to build on Virgin Money’s significant strategic and operational progress, including the consistent growth in our retail and business customers, deposits and target lending.”

The tie-up will create a combined lender worth around £366.3 billion, with total lending and advances of about £283.5 billion.

Virgin Money is the UK’s sixth largest retail bank, with around 6.6 million customers and total lending of £72.8 billion. It has a £57.1 billion mortgage portfolio and deposits of around £67.3 billion.

The group has 91 branches, which has been scaled back significantly in recent years after a series of closures due to the shift towards online banking.

Virgin Money was formerly the Clydesdale and Yorkshire bank group CYBG and rebranded after a £1.6 billion takeover of Sir Richard Branson’s banking group in 2018.

CYBG was formed in 2016 after previous owner National Australia Bank divested its UK operations.

Nationwide is Britain’s biggest building society with 605 branches and 18,000 staff and claims to have the UK’s single largest network of branches.

The combined group would have 696 branches, making it the second largest branch network behind Lloyds Banking Group.