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Virgin Money and Wilbur Ross in RBS branch bid

6 April 10 08:52 GMT

Wilbur Ross, the US billionaire, has pledged £500m to help Virgin Money bid for hundreds of branches of Royal Bank of Scotland (RBS).

Mr Ross has agreed a deal to buy 21% of Sir Richard Branson's Virgin Money for £100m, the company confirmed.

Sir Richard said he was "delighted" that Mr Ross had decided to invest.

RBS was told last year by the European Commission to sell 318 of its branches to safeguard competition concerns after being bailed out by the UK government.

The group will sell its RBS branches in England and Wales - originally Williams & Glyn's branches - as well as its NatWest brand in Scotland, RBS Insurance and Global Merchant Services, its card payment business.

The total disposal amounts to 14% of the RBS retail network.

Mr Ross said he was "impressed with Virgin Money's well-deserved reputation with UK customers and with its growth strategy".

Bid preparation

Over the weekend, Mr Ross had confirmed his interest in working with Virgin Money in an interview with the Reuters news agency. "The UK banking system is clearly going to go through a big overhaul," he said.

"There will equally clearly be some new winners and some new losers. We think that, given the management team and the reputation that Virgin Money has built up, they are ideally positioned to be one of the big winners."

Although Virgin Money is thought to be interested in other acquisitions in the banking sector, Mr Ross said the RBS branch network was the current focus and "the only one on offer right now".

"We're working with them [Virgin] on the due diligence and we're working with them on the bid preparation, so it's not just a blank cheque," he said.

Mr Ross, whose business interests include steel, oil and banking, teamed up with Virgin in 2007 for an attempt to buy Northern Rock, which, like RBS, had to be rescued by the government.

Analysts have estimated that the cost of the RBS branches up for sale could reach £2bn.

Other possible bidders for the RBS branches include Spanish bank Santander and National Australia Bank.

The European Commission also demanded last year that Lloyds Banking Group sell some of its assets.

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