The CEO of an Australian bank that will cease to exist next week has spoken out as 140 staff lose their jobs and 6000 customers also impacted.
The CEO of an Australian company that will cease to exist next week is “gutted” as 140 staff lose their jobs and with 6000 customers also impacted.
On Thursday, news.com.au reported that Volt, a digital bank known as a neobank, is closing its virtual doors for good.
The bank has urged its 6000 customers to withdraw $100 million worth of deposits before it starts closing accounts from next Tuesday.
The company, which had its offices in North Sydney, also announced it will be handing back its banking licence to the regulator on Wednesday.
Volt’s eight board members — which included former HSBC Australia boss Graham Bradley — voted to shut down the company because it had failed to raise enough funds to support its plans to write mortgages.
Speaking to BankingDay, Volt founder and CEO Steve Weston said: “I feel gutted for our team and customers who have supported the business.
“It just rips your heart out because we know we’ve built an outstanding banking platform.”
“However, without capital a bank cannot operate — without the petrol you can’t start the engine,” he told the publication.
“At the end of the day we realised we had run out of runway in terms of capital.”
Volt first launched in 2017 as the first start-up to gain the banking licence in January 2019 after the government sought to increase competition in the sector.
Mr Weston previously described his business’ demise as an “incredibly sad day”.
“We’ve built something as a team that Australia really needs to bring banking competition to the market. We’ve got technology and capability that simply doesn’t exist in Australia today,” he said.
“But for us to take that to a public launch, we need petrol in the car and by petrol we need capital. And in the current market, being able to raise the amount of capital that we needed to be able to scale up was a task that we couldn’t accomplish.”
He added as a bank it needed a lot more funding than a normal businesses and that “was the challenge that we were unable to overcome”.
Volt had been seeking to raise $200 million since February, but said the pandemic and the current challenging global economic climate had hampered those efforts.
It had previously raised $212 million over seven private rounds since its inception.
Most of Volt’s website has been closed down leaving just a statement and a list of answers to questions.
It said it had adequate funds to return customer’s money and to ease the transition of money to a different bank account quickly Volt had increased the daily transfer limits to $250,000, it told customers.
Australia’s financial safety regulator, APRA said it will closely monitor the process to ensure funds are returned to Volt customers in an orderly and timely manner.
Volt will join a long list of companies that have collapsed in recent months as the post-pandemic world take their toll, with government stimulus packages and low interest rates no longer around to reduce financial pressures on businesses.
A rival neobank called Xinja also shut down in December 2020 announcing it was closing its savings and transaction accounts, saying the pandemic had stifled its ability to attract new investors.
Another local start-up called Send promised to deliver groceries in under 10 minutes across Melbourne and Sydney but the business went into liquidation at the end of last month.
It left 300 jobs at risk and an administrator’s report found the company had burned through a whopping $11 million in just eight months.
More than a dozen construction companies have also shut down this year, including two major ones, Gold Coast-based Condev and industry giant Probuild.
And that grim list has continued to grow as a number of other high profile companies also collapsed, including Hotondo Homes Hobart, Inside Out Construction, Dyldam Developments, Home Innovation Builders, ABG Group, New Sensation Homes, Next, Pindan, ABD Group, Pivotal Homes, Solido Builders, Victorian building firm Waterford Homes, Affordable Modular Homes and Statement Builders.
Last week, news.com.au reported on Melbourne builder Snowdon Developments Pty Ltd, who is also believed to be on the brink of collapse, with sources revealing employees haven’t received their superannuation since October as well as creditors owed millions and building works stalling for more than a year.
On Thursday, news.com.au also raised questions about NSW builder Willoughby Homes, with creditors not receiving payment, customers’ sites languishing for months and its insurance not being reinstated for over a year.
The company went under as it couldn’t raise the $200 million it needed to continue operating and has urged customers to pull out their money.
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