The Australian Prudential Regulation Authority has disqualified former Xinja Bank chief executive Eric Wilson and former non-executive director Craig Swanger from being or acting as accountable persons of any authorised deposit-taking institution under the Financial Accountability Regime (FAR) for breaches of their accountability obligations. Mr Wilson was disqualified for eight years and Mr Swanger for 10 years, with the bans also applying to accountable person roles at an authorised non-operating holding company of an ADI and any significant related entity. The action follows an APRA investigation into the effect of “side agreements” linked to capital raisings at Xinja during 2020 and whether APRA was misled about the bank’s capital position. Between May and August 2020, Xinja entered into share subscription agreements with three investors that it represented to APRA as Common Equity Tier 1 (CET1) capital, but related side agreements added terms that undermined CET1 status and, in APRA’s view, undercut its capital regime. APRA found that Mr Swanger altered documents in response to requests from an external investigator appointed by APRA to remove content indicating misclassification, and that he was involved in disguising the substance of the capital arrangements and failed to exercise due skill, care and diligence or take reasonable steps to prevent adverse prudential impacts. Mr Wilson was found to have failed to exercise due skill, care and diligence, failed to deal with APRA in an open, constructive and cooperative way by not informing APRA of the side agreements and their implications, and failed to ensure adequate procedures to prevent misclassification, with APRA noting his disqualification period reflected that he did not breach the honesty and integrity obligation under section 37CA(1)(a) of the Banking Act 1959.

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