May 31 Reuters Britain39;s competition regulator said on Friday it had started a probe into Nationwide Building Society39;s proposed 2.9 billion pound 3.69 billion allcash deal to buy Virgin Money UK.

The deal, which was announced in March, could create the country39;s secondlargest savings and mortgage provider.

The Competition and Markets Authority CMA said it was considering whether the deal could result in a substantial lessening of competition in the UK.

The CMA said the notice on the launch of its inquiry had been sent to the parties, and the regulator has a deadline of 40 days for its Phase 1 decision.

The CMA also invited comments from any interested parties on the transaction by June 14.

Nationwide is the UK39;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 UKs current accounts. It describes itself as the world39;s largest building society.

Virgin Money is the UK39;s sixthlargest retail bank by assets and has around 6.6 million customers.

Responding to the deal39;s announcement in March, analysts said that the transaction could increase competition in Britain39;s mortgage and savings market and spur a revival in some bank stocks, which have wilted in the face of geopolitical tensions and lacklustre economic growth.

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Reporting by Aby Jose Koilparambil in Bengaluru and Elizabeth Howcroft in London; Editing by Rashmi Aich and Amanda Cooper

Source Reuters