Novatti’s long-held dream of entering the banking industry is one step closer, with APRA yesterday allotting a Restricted ADI licence to International Bank of Australia Pty Limited.
APRA also agreed to allow IBOA Group Holdings Pty Limited to form up as a non-operating holding company.
IBOA is the new name of a Novatti subsidiary formed five years ago to pursue a banking licence, a strategic priority chewing through capital for the ASX-listed payments enterprise.
Novatti placed its shares in a trading halt first thing yesterday, and unfortunately no one from the company or IBOA was in a position to clarify the fundamentals of the new bank’s set-up, funding and priorities.
The 2022 annual report of Novatti refers to an “impairment of capitalised bank licensing costs” but, oddly, does not quantify this impairment, nor clarify the holding value (as at June 2022) of the entity now trading as International Bank of Australia.
The company’s breezy synopsis of its strategy is: “providing businesses with everything they need to pay and be paid”, while “covering the complete payments value chain”.
The company has developed a “leading global, B2B payments ecosystem” or so said the managing director, Peter Cook, in his overview to the annual report.
As for the newly fledged IBOA, the bank’s vision is stated to be: “To simplify life for people and businesses engaging in payments domestically and across borders.” Like most RADIs (such as Alex, Avenue and IN1 Bank) IBOA will target the SME segment.
It’s proven a capital hungry ordeal for Novatti reaching this point, six years after listing on the ASX (one of the first fintechs to do so).
International Bank of Australia has two years, or until November 2024 to progress to a full banking licence.
The trading halt on Novatti shares is likely to be lifted early today, with an investor webinar scheduled for 10.30am.
Read the article: https://www.bankingday.com/novatti-iboa-score-radi
What's a
Restricted ADI?
International Bank of Australia is authorised by the Australian Prudential Regulation Authority (APRA) to operate under a Restricted Authorised Deposit-taking Institution licence until 2nd November 2024. Under this authority International Bank of Australia has restrictions on the amount of deposits it can take. Under this restricted licence International Bank of Australia is not required to meet the full ADI prudential framework and will not be offering banking products to the general public.
International Bank of Australia has put in place arrangements to protect customers in the event it is required by APRA to discontinue banking business and exits the banking industry. This includes:
- International Bank of Australia being required by APRA to contact customers to advise how they are impacted, e.g. deposits may be returned or transferred to another bank;
- the Banking Act 1959 provisions for the protection of depositors apply to International Bank of Australia; and
- International Bank of Australia is covered by the Australian Government Financial Claims Scheme (FCS). The FCS applies only to protected accounts. It is important customers check the terms and conditions of their specific product to determine if it is protected under the FCS.
Licensing guidelines for authorised deposit-taking institutions | APRA
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