Australia markets closed
  • ALL ORDS

    7,306.00
    -38.20 (-0.52%)
     
  • AUD/USD

    0.7743
    -0.0006 (-0.07%)
     
  • ASX 200

    7,061.70
    -34.10 (-0.48%)
     
  • OIL

    65.33
    -0.30 (-0.46%)
     
  • GOLD

    1,795.70
    +11.40 (+0.64%)
     
  • BTC-AUD

    74,401.50
    +2,017.24 (+2.79%)
     
  • CMC Crypto 200

    1,481.55
    +76.24 (+5.43%)
     

Aussie bank closes: $500 million to be returned to customers

Lucy Dean
·3-min read
Withdrawal Australian cash from ATM
Xinja had made a huge announcement. Image: Getty

Australian digital-only bank Xinja has announced it is closing its savings and transactions accounts and returning its banking licence after Covid-19 dealt the bank a fatal blow.

Xinja launched in 2019 and planned to offer Australians a new way to bank, offering high interest deposit accounts and an online banking model designed to draw in Millennial consumers.

However, Xinja will now close its transaction and savings account products, blaming difficult Covid-19 conditions. It had around $500 million in deposits and 47,000 accounts.

“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. This was an incredibly hard decision”, Xinja said in a statement.

“We hope to refocus the business in other areas such as our US share trading product, Dabble, should circumstances allow.”

The bank had held two equity raisings earlier this year but struggled after a $433 million investment from the Middle East was paused.

What happens for Xinja customers?

Xinja will now give its customers the required seven days’ notice before closing their accounts and encourage them to transfer their money out as soon as possible.

Accounts will immediately stop earning interest, and customers will be unable to use cards and payment facilities from 15 January.

Customers can no longer put money into their bank account through instant top up, and by 23 December, customers will also be unable to put money in through transfers or payments.

“Rest assured, your funds are completely safe, and you can easily access your funds and have ample time to transfer them via the pay and transfer function in the Xinja app,” the bank said.

“The Australian Prudential Regulation Authority (APRA) is closely monitoring Xinja’s return of deposits to ensure that your funds are returned in an orderly and timely manner.”

Customers were also told to cancel any direct debits as soon as possible, and to ideally have all of their funds gone from their accounts by 6 January 2021.

“To receive your whole balance back, please login to your Xinja app and transfer your funds to another bank account using the ‘transfer’ function. Your debit card or pay facility will cease to function on 15th January 2021.”

Xinja said these are the key dates to be aware of:

  • 14th December 2020: interest on Stash accounts accrued up to and including this date

  • 15th/16th December 2020: final Stash interest payment made and Stash accounts no longer earn interest

  • 16th December: instant top up no longer available

  • 23rd December: Stash accounts closed – inbound payments of any kind no longer accepted

  • 30th December: Xinja starts to automatically close all bank accounts that are empty

  • 15th January: cards and payment facilities no longer working from this date

Banking watchdog APRA said it will “closely monitor” how the bank returns deposits, to make sure they’re returned quickly and appropriately.

“Xinja’s decision to exit the banking industry and pursue other business opportunities is a commercial decision for Xinja,” APRA said.

Under the Government’s Financial Claims Scheme, deposits of up to $250,000 are protected by the Government.

Want to hear Australian influencers reveal their best finance tips? Join the Broke Millennials Club on Facebook, and receive one hot tip per day in December.
And if you want 2021 to be your best (financial) year yet, follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter. Subscribe to the free Fully Briefed daily newsletter here.