Australia’s newest bank, Avenue Bank – awarded an unrestricted APRA licence for the first time only this week – is already in trouble. Or, it was.
Overnight, the news broke that Avenue needed A$17M to “stay afloat” – and $17M is enough to keep the bank going for the “foreseeable future,” apparently, according to its CEO Peita Piper.
These funds it received.
But the fact of where that money came from is one of the more interesting things in this already curious saga.
I use the word “curious,” because riddle me this: how can a bank get a fully unrestricted APRA licence, and then only days later, reveal it needed $17M to survive?
To be fair: it’s not my understanding that APRA has any responsibility to ensure that banks have enough to stay afloat, necessarily – Piper has also described Avenue as a “start-up,” so, there’s that.
But at the same time, surely a reasonable person could be forgiven for asking questions.
One of those questions might be: how on Earth is $17M enough to keep a whole bank afloat into the “foreseeable future?”
But then there’s the observation one can make about where that $17M came from.
Avenue Bank’s Chairman, Stephen Rix, used to work for a company Nightingale Partners, an Australian private equity firm. So too did Avenue’s Independent Non Executive Director (NED) Christian Bernecker.
And Nightingale Partners, you’ve probably figured out by now, is one of the bodies that provided Avenue with $17M – alongside peer Liberty Partners, which for fairness I note is not featured in the bios displayed on Avenue Bank’s “About Us” webpage.
Avenue CEO Peita Piper confirmed to the press Avenue Bank had received a $17M injection on Friday, and also that the bank might need another capital raise in the near future. Whether this happens remains to be seen.
Piper, meanwhile, is a woman with a degree in chemical engineering who would later design software for Australian Wool Industries (AWI).
Piper also describes herself as a “Ubank member” in her bio on Avenue Bank’s website and claims she was instrumental in getting NAB’s digital bank Ubank off the ground. Now she’s the CEO of Avenue.
The Market Online makes no inference of criminality or untoward behaviour on anybody’s part, and I also recognise that there’s nothing illegal about a place you used to work at chucking some cash at a new venture.
For private equity, this is literally what they’re meant to be doing. I’m not ignorant of that.
This is, in fact, the nature of networking and relationships. You could even say it is the fundamental nature of capitalism.
And there’s nothing bad about that. But of course, close-knit communities in the finance world are well known for allowing small groups of people to help one another out, and sometimes this happens without benefitting the wider economy.
Again, that’s not illegal in itself.
And nor is it illegal to use Generative AI to design all of your customer-facing graphics on your company website, which Avenue Bank has chosen to do – a very low-cost option to be sure.
But does it look tacky? Well, I couldn’t possibly know, dear reader. That’s subjective – you decide.
By the way – when you Google “Avenue Bank,” you get the words “Bank guarantees in as little as 24 hours” in the top result. Users are led to a page titled “Apply Now” – but one can’t get past that.
One to watch.