Shares in British banks were up on the FTSE 100 in morning trading after a report that Virgin Money is planning to put in a bid for 600 Lloyds Banking Group branches.

Lloyds Banking Group is required to sell the branches by regulators after it received a bailout from the British government during the financial crisis.

Speaking to the Financial Times, Richard Branson, head of Virgin Group, said that he is planning to make an official bid for all 600 branches in July, adding that Virgin is talking to investors about getting three billion pounds in financing.

In the past Mr Branson expressed strong interest in buying Northern Rock and was highly critical of the previous Labour government when it decided to nationalise the failing bank rather than allow a private sector takeover.

Other possible contenders to buy the branches are Tesco's finance business, NBNK and National Australia Bank.

By 09:30 shares in Lloyds Banking Group were up 1.79 per cent to 51.65 pence per share, RBS shares increased 1.19 per cent to 41.78 pence per share, Barclays shares rose 1.58 per cent to 276.10 pence per share and HSBC shares climbed 0.73 per cent to 631.00 pence per share.

Overall the FTSE 100 was up 0.58 per cent to 5,904.30.