21 challenger banks planned for 2014

Wildman said that if the new banks complete the regulators authorisation process they could be up and running within nine months.

Sam Woods, a director in the domestic UK banks division at the Prudential Regulation Authority, said the process of applying for authorisation had been sped up and that he was hoping the new banks would make a “big impact”.

Woods said he that impact would be especially felt by SME’s.

He said: “The more dispersion of the market the more it will help in the small to medium business area.”

But Wood did caution that the PRA was taking a policy risk by speeding up the application. However he felt it was a risk worth taking.

He added: “The message we want to get out is that the PRA is open for business.”

Anthony Thomson, founder and former chairman of Metro bank, said that the speeding up of the process was providing an opportunity to stimulate the market.

He said: “Small businesses are the lifeblood of our economy and they are starved of credit.

“There are now a number of opportunities for those looking to set up regional banks.”

And Thomson felt these new banks would be able to fill a gap left by the big six’s withdrawal from business lending.

He said: “Small regional banks will have a distinct advantage when it comes to business lending.

“The regulator should be praised for simplifying the authorisation process for small banks.”