Xinja finalises deposit returns to customers, to relinquish licence

The failed neo-bank Xinja has transferred its remaining customer accounts to NAB.

Xinja will close the book on its banking, the first time an Authorised Deposit-taking Institution has returned deposits to customers in a managed exit of the business. Picture: Supplied.

Xinja will finally close the book on its banking venture, marking the first time an authorised bank has returned deposits to customers in a managed exit of the business.

The failed neobank, which was granted its licence in 2019, last month said it would throw in the towel on its operations justa year later after failing to secure ongoing funding or a lending income stream.

At the time of the announcement the bank held deposits worth more than $252m.

The neobank had wooed customers with the offers of attractive savings returns but had failed to establish a lending facilityto allow borrowing against deposits.

At its height Xinja boasted more than 37,884 customers.

The Australian Prudential Regulation Authority noted the closure of more than 54,000 Xinja accounts since the bank announced it would close.

Tuesday marked the final transfer of $65,809 from 4176 Xinja accounts to new or existing NAB accounts.

Xinja will formally hand back its banking licence to APRA over the next few weeks.

APRA formally approved the transfer of deposits from Xinja to NAB using its powers under the Financial Sector (Transfer and Restructure) Act and Banking Act.

“Xinja customers whose deposits have been transferred to NAB can elect to leave their funds there, or transfer them to anotherbank of their choice,” APRA said.

Before it closed the bank had been chasing a $433m investment by Emirates’ World Investments, reportedly being arranged by venture capitalist Michael Gale.

The investment was announced to much fanfare in March 2020, but failed to eventuate.

At the time Xinja said Emirates’ World Investments would investment $160m immediate, with the remaining $273m in multipletranches over two years.

The neobank posted a loss of $35.8m for the year to the end of June, according to its most recent annual report. This had deepened from a $21m loss a year earlier. The bank also had negative cash outflows of $38m for the 2020 financial year andnet assets of $25m.

Several other neobanks have arrived on the Australian financial scene in recent years, including Up, 86400 and Volt.

Originally published as Xinja finalises deposit returns to customers, to relinquish licence