Revocation of authority to carry on banking business 2022 – Members Equity Bank Limited

Overview

The Revocation of Authority to Carry on Banking Business 2022, enacted on 28 February 2022, concerns the revocation of Members Equity Bank Limited’s section 9 authority to conduct banking business in Australia. This legislative instrument was introduced to address the specific situation where Members Equity Bank Limited, with the Australian Business Number 56 070 887 679, requested the revocation of its banking authority. The Australian Prudential Regulation Authority (APRA) is the enacting body, and its role is to ensure that such revocation does not undermine the national interest or the interests of the bank's depositors. The policy objective is to facilitate the orderly exit of the bank from the Australian banking sector, ensuring that all stakeholders are duly informed and protected. The revocation, carried out by Therese McCarthy Hockey, an Executive Director of APRA, was made in accordance with the provisions of the Banking Act 1959.

Scope and Application

The Revocation of Authority to Carry on Banking Business 2022, issued under the Banking Act 1959, applies specifically to Members Equity Bank Limited, an entity with the Australian Business Number (ABN) 56 070 887 679. This legislation mandates the revocation of the section 9 authority that permits the bank to conduct banking business within Australia. The revocation is effective from 28 February 2022 and is executed by Therese McCarthy Hockey, an Executive Director of the Banking Division at APRA, following a written request from Members Equity Bank Limited. The decision to revoke the authority was made on the basis that it would not be contrary to the national interest or the interests of the bank's depositors. This revocation applies solely to the banking business conducted by Members Equity Bank Limited, within the jurisdiction of Australia, and is subject to the terms and definitions specified in the Banking Act 1959. There are no stated exclusions, exemptions, or thresholds mentioned in the text, and the application of the Act is limited to the specific circumstances of this case.

Key Provisions

The primary provision of this instrument (section B) revokes the authority of Members Equity Bank Limited to carry on banking business in Australia. This revocation follows a written request by the bank to the Australian Prudential Regulation Authority (APRA), and is contingent upon APRA being satisfied that such revocation would not be contrary to the national interest or the interests of the bank's depositors. The instrument specifies that the authority is revoked by Therese McCarthy Hockey, an Executive Director of APRA's Banking Division, and is effective from 28 February 2022. This revocation is grounded in subsection 9A(1) of the Banking Act 1959 (the Act), which empowers APRA to revoke a bank's authority under certain conditions. In accordance with the Act, Members Equity Bank Limited is subject to various obligations and requirements as a body corporate authorised to carry on banking business. These obligations include maintaining adequate capital, ensuring liquidity, and managing risks in a manner consistent with prudential standards set by APRA. The bank is also required to comply with the provisions of the Act and any other relevant legislation, including reporting requirements and ongoing regulatory oversight by APRA. The revocation of the bank's authority means that it must cease all banking activities immediately and take steps to wind up its banking operations in an orderly manner. The Banking Act 1959 includes provisions that establish offences and penalties for breaches of its requirements. For example, under section 91 of the Act, a person who carries on banking business without the requisite authority commits an offence. The maximum penalty for such an offence is imprisonment for five years, a fine of up to $300,000 for an individual, or $1.5 million for a body corporate, or both. Additionally, under section 92, it is an offence for a person who has been declared bankrupt to act as a director or employee of a bank without the leave of the court. The maximum penalty for this offence is imprisonment for two years, a fine of up to $120,000 for an individual, or $600,000 for a body corporate, or both. These penalties reflect the serious nature of breaches of banking regulations and the importance of maintaining the stability and integrity of the financial system.