Norwich Union looks set to expand its banking operations following confirmation that it is likely to apply for a banking licence.

The insurance giant's director of personal finance Charles Anderson said it was "more likely than not" that Norwich Union would seek a banking licence, although he stressed such plans were at very early stages.

However, the insurer was adamant it would not convert into a fully-fledged bank.

Norwich Union spokesman Andrew Stronach said: "This is not a sign that we will be turning into a bank. It's recognition that Norwich Union is a strong brand and that we want to expand our banking facilities."

Deposit-taking is the most likely area being considered by Norwich Union, and its plans may involve an internet-style service similar to Prudential's successful Egg direct savings account.

Deposit-taking is the main area of business requiring a banking licence, according to Kate Burns, spokeswoman for the Financial Services Authority, the banking regulatory body.

Norwich Union has an existing deposit account operated through Bank of Scotland, and it is also involved in individual and commercial mortgages.