Virgin Group, controlled by entrepreneur Richard Branson, is leading a consortium that has submitted a rescue plan for British bank Northern Rock that would inject a substantial cash sum, it said on Friday.

The consortium said under its proposal the cash will be injected ... for new equity to be issued at a discount to the current share price.

Virgin confirming comments made earlier on Friday by a source familiar with the matter, said Northern Rock would be renamed Virgin Money and would rebuild a deposit base to drive a more sustainable funding structure.

It would be advised by George Mathewson, who masterminded a series of major acquisitions while chief executive and chairman of Royal Bank of Scotland including the takeover of NatWest, Britain's biggest-ever bank deal.

The consortium includes U.S. insurance group AIG, buyout firm WL Ross, investment group Toscafund and Hong Kong- based investment group First Eastern.

Northern Rock shares jumped as much as 10 percent after the consortium became the first company to declare an interest in the bank, which has been engulfed in crisis after being offered emergency funding by the Bank of England a month ago.

The shares slipped off their 285 pence peak and by 10:50 a.m. EDT were up 3.1 percent at 266p, valuing the bank at just over 1.1 billion pounds ($2.24 billion).

Branson, one of the world's highest-profile businessmen and estimated to be Britain's 11th-richest person with a 3.1 billion pound fortune, pushed Virgin into financial services in 1995.

Virgin Money now offers credit cards, insurance, savings and pensions, and also products in Australia and South Africa.

But it no longer directly provides mortgages, after selling out of its Virgin One joint venture with Royal Bank of Scotland in 2001. Virgin One was launched in 1998 as a mortgage that offset current accounts, and had built up a 3 percent share of the UK mortgage market within three years.

The consortium said Jayne-Anne Gadhia, who helped set up Virgin One and moved to RBS but returned to Virgin in March, would be chief executive of the combined Virgin Money/Northern Rock business.

Branson is the face of all of the Virgin business empire, becoming a household name because of his maverick approach and headline-grabbing stunts. But one of his boldest moves -- the creation of Virgin Media by merging his mobile phone group with cable TV firm NTL in February -- has struggled due to an ongoing row with satellite firm and rival BSkyB.


Newcastle-based Northern Rock suffered the first run on a major UK bank for more than 140 years when its funding crisis surfaced last month.

It is estimated to have borrowed almost 13 billion pounds from the Bank of England in the last four weeks at a punitive interest rate.

Britain's government threw it a new lifeline on Tuesday, offering to guarantee new retail deposits and extend funding arrangements, but analysts widely expect it to be taken over.

Northern Rock, advised by Citigroup (C.N: Quote, Profile, Research) and Merrill Lynch (MER.N: Quote, Profile, Research), has said talks with suitors continue.

U.S. buyout firms Cerberus (CBS.UL: Quote, Profile, Research) and JC Flowers are considering moves on the bank, according to other sources familiar with the matter. British and U.S. newspapers have also named Blackstone (BX.N: Quote, Profile, Research), Lone Star and Apollo as possible suitors.

Northern Rock shares have rallied more than 60 percent this week as optimism has grown that the bank would receive a bid, but is still down two-thirds in the last month.