Castle Trust has entered discussions with the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) to get a banking licence.
The mortgage lender was originally authorised by the FSA in September 2012.
Since than has also offered investment products and now has £750m of assets under management and £660m of bonds outstanding.
Sean Oldfield, chief executive of Castle Trust, said: "We are delighted with the progress of the business to date and today marks a significant moment in the evolution of the company."
Castle Trust said getting a banking licence would allow it to expand its product offering across the mortgage, savings and consumer finance arms.
damian.fantato@ft.com
