Starling Bank has reported a sharp 25% decline in annual profits, primarily due to a £29 million fine for “shockingly lax” financial crime controls and a self-imposed £28 million write-off of Covid-19 “bounce back” loans. The bank’s CEO, Raman Bhatia, acknowledged that “weak controls” within Starling were the reason these BBLs could not be guaranteed by the government.
The “bounce back loan” scheme, intended to provide rapid funding to small businesses, offered full taxpayer guarantees. However, Starling’s own review determined that a portion of these loans were issued without proper adherence to the scheme’s requirements, forcing the bank to absorb the £28 million in losses rather than passing them to the public purse. This follows prior criticism of their BBL practices.
The combined impact of the regulatory fine and the BBL losses has seen Starling’s profit for the year to March fall to £223 million from £301 million. The bank is now focused on significant investment into its financial crime resources and strengthening its risk management capabilities to ensure a more robust and compliant operational future.