Branson bids for Northern Rock with consortium

LONDON - A consortium led by Sir Richard Branson's Virgin Group has been confirmed as one of the bidders for the troubled Northern Rock mortgage bank.

Branson's consortium includes: the world's largest insurer AIG; hedge fund Toscafund, headed by former RBS chairman Sir George Mathewson; venture capital firm First Eastern Investment Group; and distressed-assets investment firm WL Ross.

The list is expected to grow over the next week, while Virgin is also looking to appoint a heavyweight banking figure to chair Northern Rock.

On its wishlist are: Sir Brian Pitman, the former chairman of Lloyds TSB; Peter Ellwood, the former chief executive of Lloyds TSB; and James Crosby, the former chief executive of HBOS.

Branson's plan is to rebrand Northern Rock as Virgin Money, Virgin's credit cards, insurance and mortgage business, after merging the two and injecting equity from the consortium in return of around 50% of Northern Rock.

If successful, Jayne-Anne Gadhia, Virgin Money's chief executive, would replace Adam Applegarth, the current Northern Rock chief executive.

On Friday, Branson said his bid provided an opportunity to "make a fresh start" at Northern Rock, which has borrowed £13bn of emergency funding from the Bank of England.

Branson is facing competition from at least two other bidders. Private equity firm JC Flowers and hedge fund Cerberus have also submitted proposals, while other bidders could still to come forward.