Novatti’s long-held dream of entering the banking industry is one step closer, with APRA yesterday allotting a Restricted ADI licence to International Bank of Australia Pty Limited.
APRA also agreed to allow IBOA Group Holdings Pty Limited to form up as a non-operating holding company.
IBOA is the new name of a Novatti subsidiary formed five years ago to pursue a banking licence, a strategic priority chewing through capital for the ASX-listed payments enterprise.
Novatti placed its shares in a trading halt first thing yesterday, and unfortunately no one from the company or IBOA was in a position to clarify the fundamentals of the new bank’s set-up, funding and priorities.
The 2022 annual report of Novatti refers to an “impairment of capitalised bank licensing costs” but, oddly, does not quantify this impairment, nor clarify the holding value (as at June 2022) of the entity now trading as International Bank of Australia.
The company’s breezy synopsis of its strategy is: “providing businesses with everything they need to pay and be paid”, while “covering the complete payments value chain”.
The company has developed a “leading global, B2B payments ecosystem” or so said the managing director, Peter Cook, in his overview to the annual report.
As for the newly fledged IBOA, the bank’s vision is stated to be: “To simplify life for people and businesses engaging in payments domestically and across borders.” Like most RADIs (such as Alex, Avenue and IN1 Bank) IBOA will target the SME segment.
It’s proven a capital hungry ordeal for Novatti reaching this point, six years after listing on the ASX (one of the first fintechs to do so).
International Bank of Australia has two years, or until November 2024 to progress to a full banking licence.
The trading halt on Novatti shares is likely to be lifted early today, with an investor webinar scheduled for 10.30am.
