The Virgin consortium includes Virgin Group, AIG Financial Products, WL Ross & Co, Toscafund Asset Management and First Eastern Investment Group. The rescue plan follows Citibank's earlier decision to provide Northern Rock Bank with a £10 billion loan facility at interest rates inline with the interbank market rate of 6.25%, rather than financing at the more costly Bank of England emergency financing rate of 6.75%.

The rescue offer would include a complete re branding of Northern Rock brand under the Virgin umbrella, with a significant cash injection and the new group would be taking over the management of Northern Rock's mortgage book estimated at £100 billion.

Sir Richard Branson stated : "I've always believed that it's Virgin's role to improve things for customers through great value for money products and services, innovation and great customer service - whichever market we operate in.

"This has been evident in our financial service businesses both in Britain and abroad. I believe that if we're successful we'll be able to create an exciting new banking alternative for everyone in the UK.

"I and my team have pulled together a heavy hitting consortium that we believe has not only the knowledge and expertise but the financial clout to make a once great British institution great again."

Northern Rock Shares rallied 5% on the news closing at £2.73, up from a low of £1.10 registered less than 2 weeks ago.

By Sarah Jones
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