Branson's Virgin to buy Northern Rock

Richard Branson's conglomerate is taking the bailed-out bank Northern Rock off the hands of the British government.

NEW YORK (CNNMoney) -- Virgin Money, the financial arm of Richard Branson's Virgin conglomerate, has signed a deal to buy the bailed-out bank Northern Rock from the British government, said the companies on Thursday.

Virgin Money said that it would pay £747 million, or nearly $1.2 billion, to buy the bank from Her Majesty's Treasury. The deal is expected to be sealed by Jan. 1.

"We are ready to shake up the banking market with a fresh approach and some Virgin style," blogged Branson, chairman and founder of the Virgin Group. (Read: Branson launches Virgin Oceanic)

Northern Rock, which is active in the retail and mortgage banking sectors, fell on hard times and was taken over the British government in February 2008.

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Virgin Money said it plans to bring Northern Rock to the market as an initial public offering within five years.

"Returning Northern Rock to private ownership is an important step in rebuilding the U.K. banking sector," said Sir David Clementi, chairman of Virgin Money.

Branson founded Virgin in 1970 in London, originally as a mail order record retailer. Since that time, the company has expanded into Virgin Group, an umbrella corporation with about 200 subsidiaries.

The conglomerate's subsidiaries cover a variety of industries, including banking, airlines, telecommunications, wine, balloon flights, submarines and space tourism.