Starling Bank’s annual profits have taken a significant hit, falling by 25%, as the digital bank attributes £28 million in losses to its handling of the government’s Covid-19 “bounce back loan” scheme. The bank’s CEO, Raman Bhatia, confirmed that “weak controls” within Starling meant these loans would not qualify for taxpayer guarantees, effectively taking responsibility for the shortfall.
The admission rekindles a long-running controversy surrounding Starling’s involvement in the BBL scheme, which was intended to rapidly deploy funds to small businesses with 100% taxpayer-backed guarantees. Starling’s internal review revealed that a portion of these loans were approved without proper adherence to the scheme’s requirements, making them ineligible for government coverage.
This substantial loss, coupled with a recent £29 million fine for deficiencies in financial crime controls, has collectively reduced Starling’s profit for the year to March to £223 million.38 The bank is now focused on reinforcing its financial crime and risk management functions to ensure greater operational integrity moving forward.