Startup digital-only lender Charter Savings Bank has been given the go-ahead by regulators to begin taking deposits.
The new savings bank - whose parent Charter Court Financial Services (CCFS) is majority-owned by US hedge fund Elliott Associates - plans to open for business in March, taking on Britain's high street giants.
It promises to be a "UK bank for UK savers", offering instant access and longer term savings accounts as well as bonds, but not current accounts. All services will be provided online and via a call centre in an effort to keep costs down and offer attractive rates.
Based in Wolverhampton, CCFS also operates a mortgage business called Precise Mortgages and Exact Mortgage Experts, which helps lenders analyse and service their portfolios.
Ian Lonergan, CEO of CCFS will run the new bank, while former Hbos COO Philip Jenks will act as chairman and ex-Leeds Building Society CEO Ian Ward as vice chairman.
"We see the development of a retail banking proposition as a logical extension for our business, enabling it to diversify into new markets and build a sustainable business model for the future," says Lonergan.
The UK government has been aggressively encouraging new challenger banks to enter the market and take on the big four high street players, which still dominate. Last year two dozen firms approached regulators about obtaining banking licenses.
Many of the new entrants are taking the digital-only approach. Former Metro Bank chairman Anthony Thomson and ex-first direct CEO Mullen have secured significant finacial backing for their Atom Bank, while Anne Boden, previously AIB COO, is planning to launch her venture, dubbed Starling, this year.