It also expects its equity release market entry to take place in the first half of 2018 – almost a year ahead of previous expectations.
The newly-launched property and financial services firm, which is already a leasing and loans provider, said that the application for a banking licence will shortly be underway, and it aims to obtain full permissions within two years.
COLG is now recruiting a team under the leadership of Jason Oakley, former managing director of commercial banking and mortgages at Metro Bank, and previous head of SME at NatWest and RBS.
Joining Oakley will be Bryce Glover, former managing director of commercial banking at Alliance and Leicester – later acquired by Santander – and former non-executive director of Newcastle Building Society.
Oakley will subscribe for £400,000 of shares in the company, with Glover subscribing for £50,000.
COLG recently raised £20m to develop an integrated property and financial services business, and is backed by the Delancey and Bard family, who are listed on the Alternative Investment Market (AIM).
In its interim results for the six months ending 30 September 2017, COLG announced a loss before tax of £0.2m, against the £0.7m loss before tax recorded in the first half of 2016/17.
On 5 October 2017, COLG acquired Milton Homes, an equity release lender specialising in home reversions, for £19.7m, with plans to re-enter the “expanding equity release market earlier than was planned in October”.
The planned bridging and development finance will be undertaken by a COLG subsidiary, Credit Asset Management Limited (CAML), via a new line of business called Property and Funding Solutions Limited (PFS).
The initial timeline, outlined in an admission document published in September, forecasted the re-launch into the equity release market to take up to 18 months.
However, this has now been moved up to six months from now, said Goldstein.
“Because the equity release market is a very mature sector, we thought it was going to be a much more complex process,” he said.
“After having conversations with brokers in the market, we realised now that there’s a much quicker way to market for us than we previously thought.”
The equity release re-entry will be headed by Chris Rumsey, managing director at COLG, and will be based out of Notting Hill Gate.
However, Goldstein declined to say exactly how much funding will be made available, because the company will have to look further into market demand before an announcement could be made.
Meanwhile, secured lending will continue to be provided for customers of the existing CAML business.
Tech and oligopolies
The report also noted that technological advances since the financial crash of 2008 have made the bricks and mortar network of branches less significant as a barrier to entry, and provide momentum to the “strong desire to break the banking oligopoly” through challenger banks.
Michael Goldstein, chief executive officer of COLG, said that once necessary permissions have been granted, lending will take place through a hybrid format that merges the online with the traditional.
“Deposit taking and customer access – in terms of access to accounts – will be done through a combination of online, telephone and post,” said Goldstein.
He continued: “While there won’t be a branch network, there will be personal banking relationships, which we think are missing in the market.
“The lending process will be human – it’s important in order to build trust between the bank and its customers.”
Although deposit taking and customer access will be moved online – with the potential of an app-based approach – lending will be conducted through mobile managers contacted through the phone.
Shortly under way
“During the first six months of the financial year, the business of our leasing and loans platform, CAML, continued to progress with its own book portfolio increasing from £13.8m to £14.1m in September,” commented Goldstein.
He continued: “I am delighted that our banking licence application will shortly be under way. We are also in the process of establishing our new business line in property bridging funding under the existing CAML business, and our re-launch of the Milton Homes equity release business may be achieved more quickly than originally envisaged.
“Overall, the future is looking bright with a strong leadership team in place to deliver on all our strategic objectives.”