Perenna has been granted a restricted banking licence by the PRA and FCA, in a key step towards its ambition of becoming the first dedicated UK covered bond bank with Danish-style issuance and offering fixed rate mortgages of 30 years and longer, potentially by year-end.

The licence was granted by the Prudential Regulation Authority and Financial Conduct Authority last Thursday (11 August) to Perenna FFL PLC, which the company plans to rename Perenna Bank plc.

Perenna has also secured $30m (£24.8m, €29.4m) of funding from Silverstripe Investment Management, part of US private investment office IAG Capital, in its Series A funding round.

Subject to satisfactorily demonstrating its governance and infrastructure, and the regulator proving timely in its actions, Perenna expects to have the licence restrictions lifted and begin lending towards year-end or in the first quarter of 2023, according to CEO and co-founder Arjan Verbeek (pictured).

“Now we can introduce the concept and hopefully work with all the relevant stakeholders,” he told delegates at the Covered Bond Investor Conference on 30 June, in anticipation of the authorisation.

“The UK market is still dominated by five or six large mortgage lenders, but there are over 100 in the UK, and we’ll invite all the others to come and use our platform – we’ll buy the assets off you and fund that in the covered bond market, creating a seventh power, if you like, against the big guys.”

Perenna has long flagged deficiencies in the UK mortgage market and says current economic difficulties further highlight the benefits of the long term mortgage lending it plans.

“There are so many reports on what needs to happen to the UK market, but it’s all talk and nobody actually does anything,” said Verbeek. “It’s not working properly for first time buyers, it’s not working for people who are over 50 – it works only if you’re rich with a big deposit.

“To change that, almost to get social justice in there, you need to have a connection between the real money investor base and the mortgage market. That’s what we’re going to change and that should have a major positive impact.”

Having received its banking licence, Perenna is embarking upon an application for a covered bond licence.

“We would like to get the license as soon as possible,” Verbeek told The CBR today, “but we are the first covered bond bank, they to date have only seen covered bonds from existing banks with existing books, so there will be work to do. The timing is therefore uncertain, but we are working as fast as we can.”