The proposed merger between mortgage and financial service providers Nationwide and Virgin Money is to be investigated by the UK’s competition watchdog.

The country’s biggest building society announced the £2.9 billion deal with its smaller rival in March – the biggest banking merger since 2008 – and if it goes ahead the combined group would have 700 branches, second only to Lloyds Banking Group.

The Competition and Markets Authority will examine whether it would result in a substantial lessening of competition within the UK banking sector.

Virgin Money is now the UK’s sixth largest retail bank with around 6.6m customers, while Nationwide has some 18m: the proposed takeover would see thew Virgin brand continue, at least in the short term.

The CMA has set a 40-day deadline for the first phase of its investigation, during which it will evaluate whether the transaction constitutes a “relevant merger situation” and if it could lead to a substantial lessening of competition.

The CMA is inviting comments from any interested parties by June 14.

Meta description: Discover the details of the Nationwide-Virgin mortgage mega-deal as the UK’s competition watchdog investigates the proposed merger.