The Australian Prudential Regulation Authority (APRA) has agreed to revoke the restricted authorised deposit-taking institution (ADI) licence of emerging challenger institution, the International Bank of Australia (IBOA).

APRA confirmed that at the time of its revocation, IBOA had not launched any products, had no customers and zero deposits.

APRA granted IBOA and its non-operating holding entity restricted ADI (RADI) licences in November 2022.

The RADI pathway enables eligible applicants to conduct limited banking business for a maximum of two years before they must meet the prudential framework in full, including full ADI capital requirements.

IBOA was launched as a neobanking spin-off of ASX-listed payments fintech Novatti. Upon launch, Novatti said its new bank would give the group “real infrastructure and real licensing within the world of payments” and “drive the deepest margins with a lot of our payment services”.

IBOA targeted what it saw as Australia’s “underserved” migrant and student community, even before they arrived in the country. Novatti said it hoped to achieve a full ADI within 12 months of receiving its RADI.

Like many of its neobanking peers, however, IBOA struggled to raise the required funding to meet the prudential regulator’s capital buffers.

Novatti in July this year decided to sell IBOA to investment bank Eurus Capital and its partners for $2.87 million.

Eurus, which had actively sought an ADI, was thus responsible for raising the necessary capital to meet its obligations as a full ADI, which was due in a matter of weeks.

APRA confirmed that the IBOA’s decision to request a revocation of its RADI licence would “not prejudice any future application it may make for an ADI or restricted ADI licence”.

IBOA currently states on its website: “Watch out for this space. We will be back soon.”