Virgin, the rail, media and airline group, is teaming up with investment groups from outside the UK, in an effort to raise an estimated £20bn to refinance the Newcastle-based bank.
The plan would see the existing Virgin Money business merged with the crisis hit bank, which would then be rebranded under the Virgin name. This would happen in a similar way to the rebranding of NTL as Virgin Media, following its tie up with Virgin Mobile.
Virgin Money already offers credit cards, insurance and mortgage products. The Virgin One business was sold off in 2001 to RBS and is not connected to the Virgin Money business.
The deal would give Virgin and its partners, which are from the US and the Middle East and are providing most of the money, a controlling stake in the business. However, it would fall short of a full takeover.
Operational control of the bank would remain with Virgin. Jayne-Anne Gahdia, the former chief executive of Virgin One, is leading Branson's team. Gahdia has more recently been working on setting up a mortgage business for Virgin Money.
The bid will pit the Virgin Group against a number of other private equity bidders, including Cerberus and JC Flowers.
Bidders have been attracted to the bank, which faced financial disaster and was forced to seek emergency help from the Bank of England, after chancellor Alistair Darling said that new customer accounts would also be guaranteed.
The deadline for bids, which are being handled by Merrill Lynch, expires today at 4pm, although an extension may well be granted.