Hargreaves Lansdown is expected to apply for a full banking licence in a bid to retain clients and pay better rates on cash deposits.
The Mail on Sunday reports that analysts at investment bank Morgan Stanley are predicting the move, which may be announced at Hargreaves’ full-year results on Wednesday.
Morgan Stanley estimates Hargreaves has around £3.8bn in client cash based with other banks.
The bank said: “Isa reforms allow for increased cash holdings plus flexibility between cash and investments, and pension reform would also increase client cash. To attract and retain customers, we believe Hargreaves will have to pay more competitive rates on client cash.”
Separately, JP Morgan Cazenove predicts full-year profits to be 15 per cent year-on-year, to £209m.