Australia's Xinja Bank will give up its little over a year-old banking license and return more than A$500 million ($377.8 million) in deposits, the digital bank said on Wednesday, bowing to funding troubles in a near-zero interest rate environment.
"After a year marked by COVID 19 and an increasingly difficult capital-raising environment, and following a review of the market in Australia, Xinja has decided to withdraw the bank account and Stash (savings) account and cease being a bank," the company said.
Xinja, unlike some of its so-called neobank peers with banking licenses, never got a lending product off the ground to offset the interest it had to pay on deposits.
Australia's banking regulator, in a separate statement, said it will closely monitor the return of deposits. In May, Xinja said it had as over 47,000 accounts and more than A$500 million in deposits.
The online bank, which was founded in 2017 and only received a banking license last September, said it now hopes to focus on its U.S. trading platform Dabble "should circumstances allow."
Customers' Stash saving accounts will be closed by Dec. 23, and most services, including debit card or payment options, will stop working by January, Xinja said on its website.
In March, Xinja secured a A$433 million investment from a United Arab Emirates-based investor that found itself tied up in pandemic-related delays.
($1 = 1.3235 Australian dollars)
(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Tom Brown)
