Volt, a high-profile digital bank operating in Australia, has taken the extraordinary measure of announcing it will close its business, and return its banking license to regulators.
In a post on the digital bank’s website Volt announced:
“Volt has made the difficult decision to close its deposit-taking business and has commenced the process of returning all deposits to its account holders. Customers need to transfer the balances held in all Volt accounts to a nominated bank account with another financial institution before the 5th of July 2022. The interest rate on all accounts has been set to zero. All interest has been accrued to your account up to the 29th of June 2022 when the interest rate was changed to zero. This interest will be paid to your Volt account on the 29th of June 2022 except for the Save and Spend accounts which will be paid on the 1st of July 2022. It is recommended that all customers stop using their accounts immediately. If your account is a Term Deposit, there will be no break costs in relation to the early closure of your account.”
Volt assured its customers that accounts are currently still operational but they must quickly transfer funds to another institution. The Fintech said the Australian Prudential Regulation Authority (APRA) is closely monitoring this process adding that accounts are guaranteed up to $250,000 per account.
Earlier today, APRA issued the following statement:
“The Australian Prudential Regulation Authority (APRA) notes today’s announcement by Volt Bank Limited (Volt) that it intends to return all funds to depositors and ultimately relinquish its licence to operate as an authorised deposit-taking institution. Volt’s decision to exit the banking industry and pursue other business opportunities is a commercial decision for Volt. As Australia’s financial safety regulator, APRA will closely monitor the process to ensure funds are returned to Volt depositors in an orderly and timely manner.”
It has been reported that Volt holds around A$ 100 million in deposits.
AFR.com reported that Volt had been seeking a A$200 million Series F round earlier this year but was unable to raise the needed capital. Volt CEO Steve Weston told the newspaper :
“In this raise, we needed to bring in new, larger investors, and for us, the timing just didn’t work. We just couldn’t raise the level of capital we needed to.”
Volt was said to be burning through about A$ 1 million each week.
Late last year, Volt announced a partnership with crypto exchange BTC Markets (BTCM) in order to offer BTCM and its clients access to Volt’s banking-as-a-service (BaaS) platform. BTCM has stated on Twitter that the collapse of Volt will have no impact on its operations.
Dear Clients,
It was announced today that one of our partners, Volt Bank, will be closing its operations on July 5, 2022. We would like to note that there are no material impacts to our company, and we wish the staff at Volt all the best during this difficult transition.
— BTC Markets (@BTCMarkets) June 29, 2022
Reportedly, Volt has told its approximately 140 employees they no longer have a job.