Xinja Bank stuck in limbo after failing in bid for name change

Xinja Bank is unable to operate after failing to win shareholder approval to strike the word ‘bank’ from its name and reinvent itself as a wealth platform.

Xinja chief executive officer and founder Eric Wilson.

Xinja Bank is stuck in no man’s land and unable to operate after failing to win shareholder approval to strike the word “bank” from its name and reinvent itself as a wealth platform for 25 to 45-year-olds.

At an extraordinary meeting on Wednesday, only 69 per cent of shareholders backed the name change to Xinja Holdings — short of the required 75 per cent for a special resolution.

Aggrieved investors, including 16 per cent holder Jade Capital of China and local outfit Mackeller Capital, with a 1 per cent stake, ­opposed the resolution.

Xinja, which has returned its deposits to customers and intends to hand back its banking licence to the Australian Prudential Regulation Authority, is hamstrung by legislation banning firms from using the word “bank” in their name if they don’t hold a licence.

A spokesman for the company on Wednesday said the board was considering its options.

“While the overwhelming ­majority of shareholders supported the plan and voted in favour, it is unfortunate that a bloc of overseas-based shareholders voted ­together to narrowly defeat the motion,” he said.

In a separate poll, more than 70 per cent of shareholders answered “yes” to the question of whether they supported Xinja’s proposed relaunch as a wealth business, ­initially centred on its US share-trading platform Dabble.

The spokesman said this amounted to a “ringing endorsement” of management’s proposal.

Xinja chief executive Eric ­Wilson told the meeting that a ­further $5m in capital was needed to pursue the plan. The other ­proposal in the non-binding poll — to liquidate Xinja — attracted a 99 per cent “no” vote.

“We will be working to honour the wishes of the majority of shareholders,” the company spokesman said.

Xinja decided to return its deposits and cease operating as a bank after an aborted capital raising last year. The company, which was started in 2017 by Mr Wilson, a ­former NAB executive, had $457m in deposits and raised $89.2m in capital from investors by June 2020. The equity base, however, had shrunk to $25m after accumulated losses of $64.2m.

Xinja desperately needed more capital but the final blow came when a $433m investment from Dubai-based World Investments, flagged by Xinja in March 2020, failed to materialise.

Mr Wilson penned a letter to shareholders before the meeting to ask if they preferred to lock in a substantial loss of 95c-100c in the dollar, or recapitalise and seek a superior return with the prospect of receiving nothing if the new venture failed. “I don’t wish to sugar-coat this. It will be a long and difficult journey with considerable risk. We will be starting with a small team and limited capital. It will require raising further capital,” he said.

“These decisions of course rest with the board, but the directors want to seriously consider the wishes of shareholders and this is a strong way to understand that.”

Xinja is not the only neobank to lose its independence, with 86 400 recently absorbed by NAB.

NAB’s aim is to accelerate the growth of its digital lender UBank.