Sir Richard Branson may finally achieve his ambition of mixing it with the big names in the financial services industry with the takeover of Northern Rock.

Sir Richard Branson may finally achieve his ambition of mixing it with the big names in the financial services industry with the takeover of Northern Rock. It's a move that has been made possible because of the success of Virgin Money. Business editor Chris Starkie reports

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When Sir Richard Branson launched his Virgin Direct in Norwich more than a decade ago, the entrepreneur talked about shaking up the British banking scene.

He almost achieved this with the launch of the Virgin One Account, which brought together mortgage, current account, savings and loans into a single account.

Launched a decade ago by up-and-coming Virgin Direct executive Jayne-Anne Gadhia, it proved a hit with customers, but was sold by Sir Richard to joint-venture partner Royal Bank of Scotland for £165m in 2002.

Since then, Virgin Money has focused on credit cards, investments and insurance, building a successful and profitable enterprise.

Virgin Money now boasts almost two million customers and around a 5pc share of new credit cards. It has also launched general insurance products and most recently, a range of life and cancer cover.

Virgin Money has also widened its horizons, launching in Australia, South Africa and most recently the United States, latching on to the popularity and familiarity of the Virgin name in those locations.

But despite Sir Richard's great vision of breaking into the financial services big league, Virgin's UK business has remained a niche player.

In an ultra-competitive market place it has been innovative and fresh, but outgunned by the bigger marketing departments of the big five banks.

Ms Gadhia left Virgin in 2002 when RBS took control of the One Account, rejoining Virgin Money as chief executive earlier this year.

While at RBS she climbed the ladder, moving to the bank's Edinburgh head office to run the entire RBS Mortgages operation, responsible for a mortgage book of more than £55bn.

On her return to Virgin Money in March, she was tasked by Sir Richard with leading Virgin into the mortgages market.

Virgin Money had for some months been talking to possible mortgage partners and had begun working on plans for a new range of mortgage products when Northern Rock hit trouble.

For Sir Richard and Ms Gadhia, it was too good an opportunity to ignore.

The rationale was simple. If the right deal could be put together, Virgin Money could at a stroke become one of the five biggest players in the UK mortgage market. But they couldn't do it on their own.

The deal involved putting together a heavyweight team, including Sir George Mathewson, former chairman of Royal Bank of Scotland, who was responsible for the bank's takeover of NatWest and Ms Gadhia's former boss.

Sir George will remain senior adviser to the consortium, while another giant of the banking world, Sir Brian Pitman, former chairman and chief executive of Lloyds TSB, will be chairman.

All believe there is a business to be saved. Ms Gadhia revealed recently that while at RBS, her team had always been impressed with Northern Rock.

She argued that Northern Rock had a strong mortgage book and a very cost-efficient mortgage processing operation.

The difficulty was the bank had been too aggressive in lending and over-reliant on the money markets for its financing.

Now she believes if savers can be attracted back to the bank, tempted by the trusted Virgin brand, combined with a more pragmatic approach to new mortgages, the business can be turned around.