Xinja investors are fighting a rearguard action for the fintech to keep its banking license

A group of shareholders with more than 20% of the issued capital in failed neobank Xinja are pushing the company to keep its banking license.

Xinja announced in December that it was handing back its backing licence and has since returned more than $250 million in deposits to customers

Investors have been presented with two options for the company’s emergency general meeting at 10am today, February 17.

The company has more than 2,500 shareholders globally.

Founder and CEO Eric Wilson emailed them in late January offering of a non-binding vote plans to either wind up the fintech or “if shareholders are willing to support it, the business may be able to reset and rebuild shareholder value” as a wealth platform. The company has been looking at launching a share trading platform in the US.

Shuttering the venture would deliver 0-5% on investor money. The company famously raised $50 million via crowdfunding in March 2020, its second crowdfunding raise, amid $70 million raised in total – most recently a $10 million top up last September.

But a group of shareholders representing more than 20% of Xinja’s issued capital, have banded together to form the Xinja Action Group and lobby others to vote against two options at today’s EGM. Instead they want Xinja to retain its banking license, launch a capital raising, and restructure of the current board and management with industry-recognised executives in the financial services sector.

“We believe that if the bank is able to retain its license, be recapitalised and repositioned to allow greater opportunity for success, it will better preserve the value for shareholders and provide much needed competition in the banking sector, in the national interest,” a spokesperson for the group said

Ahead of today’s EGM meeting, Xinja’s largest single shareholder, Jade Minerals Investments, which has a 16.5% stake, wrote to Wilson on February 10, with company representative Gao Zhi Hao requesting two items be added to the meeting agenda, including the action group’s proposal.

The proposal was rejected with Xinja’s lawyers replying on February 15 saying the company was happy to discuss the matter .

“We think it would be helpful if you were also able to attend the meeting so you can advise Jade Minerals on APRA’s regulation of authorised deposit taking institutions,” Xinja’s lawyers wrote.

“It appears to Xinja that Jade Minerals does not fully appreciate some of the regulatory obligations on Xinja as an authorised deposit taking institutions. This may be in part due to the fact that Xinja is not able to disclose the full details of all of the correspondence with APRA.”