It has been reported that the Virgin Group boss is in discussions with a group of Middle East and US investors about injecting cash into the bank in exchange for a controlling stake.
This announcement follows Wednesday’s share price surge after it came to light that a hedge fund manager had a 4 per cent stake in the bank.
There has been growing speculation in recent weeks over the bank's potential suitors, with JC Flowers and Cerberus featuring prominently - alongside another who as yet remains unnamed.
If the takeover bid is successful, Virgin will then assume control of Northern Rock’s day-to-day management, bringing it in under its Virgin Money brand.
It is thought a statement could be made as early as today. However sources say that if a deal is reached, it may not come to fruition for weeks or even months.
The financing package which Virgin is believed to be putting together, has been reported to include debt from the US bank Citigroup who agreed to be on standby to lend as much as £10 billion to Northern Rock or bidders for the company.
New Star's Simon Ward has estimated that in the week to Wednesday 10 October, Northern Rock borrowed a further £2.3 billion from the Bank of England (BoE) - bringing the total borrowings to a huge £12.9 billion.
Citing his scrutiny of the BoE's balance sheets as "the best available estimate of the extent of the Bank’s support to the troubled mortgage lender", Ward noted that the weekly increase in borrowings is beginning to slow.
