Starling Bank is embarking on a path to recovery after a challenging year saw its annual profits drop by 25%, largely due to £28 million in Covid-19 “bounce back loan” losses and a significant regulatory fine.44 The bank has taken responsibility for the BBL losses, with CEO Raman Bhatia attributing them to “weak controls” that made the loans ineligible for government guarantees.

The decision to absorb the £28 million in BBL losses, rather than seeking taxpayer guarantees, signals a commitment to accountability after prior controversies regarding their handling of the scheme. Starling’s internal review confirmed that some loans were issued without meeting the necessary procedural requirements. This comes alongside a £29 million fine for inadequate financial crime controls.

These financial setbacks have significantly impacted Starling’s profitability, reducing its annual profit to £223 million.45 Moving forward, the bank is making substantial investments in its financial crime resources and strengthening its overall risk management and compliance capabilities to build a more robust foundation for its future growth and regain stakeholder confidence.