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Virgin heads consortium in £1bn Northern Rock offer

Richard Branson’s Virgin Group has entered the circle of bidders for the crisis-ridden Northern Rock, heading a consortium of heavyweight names.

The consortium includes insurance giant AIG, Wilbur Ross, Toscafund and Hong Kong’s First Eastern Investment Group.

Last week, the consortium put forward a proposal to inject around £1bn of cash into the business in return for a stake of 50 per cent or more in the bank. Virgin plans to keep the bank on the stock market but to re-brand it as Virgin Money.

If the deal goes ahead the business would be run by Virgin Money chief executive Jayne-Anne Gadhia, who was set to head its reformed mortgage business.

Money Marketing revealed in January this year that Virgin Money was planning a return to the UK mortgage market. Virgin first launched into the mortgage market in 1998 with the Virgin One account, which combined a current account with a mortgage. But since Virgin One was bought out by Royal Bank of Scotland in 2001, the group has had no presence in the market.

Other interested parties in Northern Rock are believed to include two US investment firms, JC Flowers and Cerberus.

Northern Rock says the proposals it has received so far have only been preliminary in nature.

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