Australian Prudential Regulation Authority imposes first Financial Accountability Regime disqualifications with eight and 10 year bans for former Xinja Bank CEO and director

The Australian Prudential Regulation Authority (APRA) has disqualified former Xinja Bank chief executive Eric Wilson for eight years and non-executive director Craig Swanger for 10 years from being or acting as accountable persons of any authorised deposit-taking institution under the Financial Accountability Regime (FAR), citing failures to meet accountability obligations. The orders are the first disqualifications under the FAR and also apply to accountable person roles at authorised non-operating holding companies of ADIs and significant related entities. The action follows an APRA investigation into the impact of “side agreements” linked to Xinja’s 2020 capital raising and whether APRA was misled about the bank’s capital position. Between May and August 2020, Xinja entered share subscription agreements with three investors that it represented as raising Common Equity Tier 1 (CET1) capital, alongside side agreements containing terms that APRA said undermined CET1 status and, in turn, APRA’s capital regime. APRA found Mr Swanger altered documents in response to requests from an APRA-appointed external investigator and was involved in disguising the substance of the capital arrangements, alongside failures of due skill, care and diligence and reasonable steps to prevent adverse prudential impacts. For Mr Wilson, APRA found failures of due skill, care and diligence, openness and cooperation with APRA regarding the side agreements, and adequate procedures to prevent misclassification and reporting of capital as CET1, with the shorter disqualification reflecting that APRA did not find a breach of the honesty and integrity obligation under section 37CA(1)(a) of the Banking Act 1959. APRA determined the conduct breached the Banking Executive Accountability Regime, which was superseded by the FAR in March 2024.