Virgin announces £100m investment by tycoon

The American billionaire, who made his fortune investing in struggling steel and oil companies, will take a 21 per cent stake in Virgin Money through his WL Ross investment vehicle.

Virgin said the investment would provide fresh capital to allow it to speed up the expansion of its full-service retail bank and help it create a branch network.

The firm is thought to be making a play for the UK high street with a bid for 318 Royal Bank of Scotland branches being sold off under competition rules.

Virgin is expected to face stiff competition for the RBS branches.

If Virgin fails to win the RBS network, the group has its own plans to enter the high street, with aims to open 70 branches by 2015 and a loan book of 10bn financed by the 100m of new capital.

Virgin Money said the deal allowed Mr Ross the flexibility to pump

more money in to fuel further expansion.

Mr Ross said a further injection of cash was possible and he was "impressed" by Virgin Money's growth strategy and customer service reputation.

"We look forward to supplying substantial additional capital to support Virgin's acquisition programme," he said.

The US billionaire is reportedly willing to invest up to 10 times his initial investment if needed.

Virgin has long held high street banking aspirations.

It lined up Mr Ross as a backer to support its unsuccessful 2007 bid for now-nationalised Northern Rock.

The group currently offers savings, credit cards, insurance and investment products to more than 2.5 million customers. It has the capability to provide a full array of products including mortgages and deposits after the recent acquisition of Somerset-based Church House.

Virgin Group founder Sir Richard Branson said: "I am delighted that WL Ross has decided to invest and partner in our vision for a new way of banking."

The RBS assets going under the hammer were put up for sale under the Williams & Glyn's name after the European Commission ordered the bank to divest assets to meet state aid rules.