Would-be lender Portillion has withdrawn its application to the FSA for a banking licence.
Portillion made its application to become a mortgage lender in May 2011.
A Portillion spokeswoman says: “Portillion’s board confirms that the application to the FSA for a banking licence has been withdrawn.
“Difficult market conditions continue, however it is the board’s belief that opportunities in the mortgage market remain and all options are being evaluated by the board and investors.”
She says it is too early to comment on the future of the business.
In 2007, Stephen Knight revealed his plans to launch a lender called Checkmate Mortgages, which was rebranded as Portillion in February 2010.
In February 2011, Knight stepped down due to ill-health.
Portillion, which had secured a £58m investment from SBI Group of Japan, had set an original launch date of January 1, 2012 and planned to offer a range of direct to consumer savings products and mortgages through intermediaries.
Lentune Mortgage Consultancy director Stuart Gregory says: “It is a shame Portillion has withdrawn its application. It would be good for the market to have some new entrants to put a bit of pressure on the existing players.”