Starling Bank has endured a challenging financial year, with annual profits dropping by 25% due to a self-acknowledged £28 million loss from Covid-19 “bounce back” loans and a hefty £29 million regulatory fine for “shockingly lax” financial crime controls.32 CEO Raman Bhatia admitted that the BBL losses were a direct result of Starling’s “weak controls,” rendering them ineligible for government guarantees.
The “bounce back loan” scheme was designed to provide rapid financial assistance to businesses, with taxpayers guaranteeing 100% of the loans. However, Starling’s internal review concluded that some loans were issued without meeting the necessary procedural requirements, forcing the bank to absorb the £28 million cost. This issue has been a long-standing point of contention for the bank.
The combined impact of the BBL loss and the regulatory fine has seen Starling’s profit for the year to March fall to £223 million from £301 million.35 The bank is now actively investing in its financial crime and risk management capabilities, aiming to build a more robust and compliant foundation for its future growth trajectory.