U.S. billionaire investor Wilbur Ross will buy a stake in Richard Branson's Virgin Money, backing the British entrepreneur's bid to buy hundreds of branches of the government-owned Royal Bank of Scotland.

Ross, who made his fortune investing in struggling steel and oil companies, will take a 21 percent stake in Virgin Money for an undisclosed sum through his WL Ross investment vehicle under the deal announced Tuesday.

Virgin says the investment will speed up the expansion of its full service retail bank and help it create a branch network.

RBS was ordered by the European Commission last year to sell 318 of its branches to ensure competition after the government bailout.

Ross adds that he may invest more funds — up to 10 times his initial investment — in Virgin.