Digital bank Volt has announced it is closing its deposit-taking business and intends to return its banking licence.
Volt said the decision was made by the board after it failed to secure enough additional funds through a capital raising to support its plans to write mortgages.
The bank told its 140 staff on Wednesday morning that they were out of a job.
The online bank confirmed it has notified the Australian Prudential Regulation Authority (APRA) of its intention to close its deposit-taking business, return all deposits to its customers and hand back its banking licence.
The decision was made by the Volt board having reviewed recent progress in capital-raising initiatives globally which have been unsuccessful in raising sufficient additional funds to support the business.
Volt CEO Steve Weston (pictured) said in reaching this difficult decision, Volt “had considered all options but ultimately had made this call in the best interest of its customers.”
“The entire Volt team is deeply disappointed to have reached this point,” Weston said.
“We are enormously grateful to everyone who believed in what we were trying to achieve and worked tirelessly to make Volt a success.”
The online bank advised its customers they would need to withdraw their funds from their Volt bank accounts before 5 July 2022 and the interest rate on all accounts has been set to zero.
Volt has executed a transaction to sell its mortgage portfolio and begun the process of returning all deposits to customers in full.
Volt says the company has the necessary liquidity available at hand to facilitate this process.
APRA is closely monitoring the return of funds. All customer deposits held with Volt remain safe and are guaranteed by the government up to $250,000 per account holder under the Financial Claims Scheme.
The bank has taken steps to reduce all expenses and staff numbers, other than those required to support the orderly return of deposits and pursue a realisation of the value of its remaining assets.
It has been recommended that all customers stop using their Volt accounts immediately and there will be no break costs to customers in relation to early closure.