Richard Branson’s Virgin is the clear favourite to win crisis-hit British bank Northern Rock but must offer better terms to seal the deal, it was reported today.

Crisis-hit Northern Rock suffered more stock market misery today amid revived speculation that the mortgage lender faces nationalisation.

The battle for crisis-hit British bank Northern Rock looks set to intensify this week as a number of suitors re-table bids to rival the one put forward by Virgin, it was reported today.