Sir Richard Branson has given his clearest hint yet that Virgin will become a high-street bank within two years. He said that Virgin would return to the mortgage market and obtain a banking licence, possibly through an acquisition.

Sir Richard led a failed attempt to take over the ailing Northern Rock in late 2007, but has stayed determined to expand Virgin Money into the high street. He believes that the lack of trust in existing banks and lenders will give Virgin an opportunity to build market share quickly.

He said: “We are going to get back into the mortgage business and we will become a bank either by acquisition or by getting our own banking licence. You will see us become a consumer bank within the next couple of years.”

It is understood that Virgin is lobbying the Government to break up Royal Bank of Scotland (RBS), now 70 per cent state-owned, to bring more competition into banking. If parts of RBS were put up for sale, Virgin would use this to gain the foothold that it needs in the high street.

If unable to buy, Virgin could take advantage of the collapse in property lease prices, after the closure of big retailers, to build a branch network.

Virgin would seek to develop a low-risk, savings-based institution.

Virgin's mortgage product, Virgin One, was sold to RBS in 2003.

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