Virgin Money intends to raise 150 million pounds from a stock market listing in London, the company said on Thursday. It will pay 50 million pounds to the UK Treasury under the terms of its purchase of nationalised lender Northern Rock in 2011.

Virgin will also give each of its 2,800 staff shares worth 1,000 pounds, which they can sell after one year. About 2,000 staff will also get 1,000 pounds of shares that were awarded at the end at the end of 2012, subject to the company listing.

Branson, one of Britain's best known businessmen who founded Virgin as a record company in 1970 and has since pushed into airlines, telecoms and space travel, will sell part of his stake in the offer, but Virgin declined to say how much.

Analysts have estimated Virgin Money will be valued at between 1.5 billion and 2 billion pounds, potentially valuing Branson's stake at almost 1 billion pounds.

The listing effectively marks the return to the stock market of Northern Rock, which collapsed in 2007 after it suffered the first run on a British bank in more than a century.

News of funding problems prompted customers to rush to withdraw their cash, making the bank an early symbol of the financial crisis. Britain nationalised the lender and split it in two, and Virgin bought much of the business.

Virgin Financial Investments owns 46.5 percent of Virgin Money, and WL Ross, the U.S.-based investment vehicle of U.S. billionaire Wilbur Ross, owns 44.9 percent.

Virgin said both men and other shareholders and employees will sell shares in the offer so that the free float of the company will be at least 25 percent when it lists, indicating that more than 375 million pounds of new and existing shares will be sold in total in the offer.

BANK FLOTATIONS

Newcastle-based Virgin Money would be the fourth UK bank to float this year, following the listings of TSB (>> TSB Banking Group PLC) and OneSavings (>> OneSavings Bank PLC) and the plans by Aldermore to arrive soon.

Chief Executive Jayne-Ann Gadhia, who will become the first woman to head a publicly listed UK bank, said the company had always planned to list within three years of the Northern Rock deal.

"This is part of the natural evolution of the company and one we're very pleased to be taking," she told Reuters.

Gadhia said she hoped staff would celebrate the share award.

"The staff that saw Northern Rock through the crisis have done brilliantly to make sure the business continued to flourish and get us to this place."

Other banks preparing for initial public offerings include Santander UK (part of Spain's Santander (>> Banco Santander, S.A.)), Shawbrook and Metro Bank. Williams & Glyn is being spun out from Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) and could list before the end of 2016.

The new banks are looking to pick up business from established rivals who are slimming down in order to bolster their capital positions and meet tougher rules from regulators. Britain's economic growth and the removal of concerns about Scotland separating have encouraged the banks to list.

Virgin Money said the 150 million pounds of new shares it sells will support its growth and boost its capital strength.

It has 2.8 million customers and 75 branches, and made an underlying pretax profit of 59.7 million pounds in the first six months of this year. That was up from 53.4 million for all of 2013, its first profit since the Northern Rock deal.

(Reporting by Steve Slater; Editing by Keith Weir)

By Steve Slater