RBA emergency rate cut bites into neobank
(5 March 2020 – Australia) Xinja Bank has halted new deposits following the Reserve Bank of Australia’s emergency rate cut.
The neobank, which received a banking licence six months ago, said it wanted to shield customers from the ultra-low interest rates as major banks sliced deposit rates in response to the RBA decision.
"We have to limit deposits. We don't have a lending program yet. Obviously, as a new bank, we have to manage costs," said CEO Eric Wilson. "People are joining us so fast we have to control those costs."
It is understood the level of deposits, which far exceeded expectations, has seen Xinja approach its minimum regulatory capital ratio. Xinja would not comment on whether APRA insisted that it turn off new accounts until more regulatory capital is raised.
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