Starling Bank has seen its annual profits plunge by 25%, a direct result of both a £29 million fine for inadequate financial crime controls and a self-imposed £28 million loss from the government’s “bounce back loan” scheme. The bank’s leadership has taken responsibility for the BBL losses, acknowledging that “weak controls” rendered these loans ineligible for government guarantees.
The “bounce back loan” scheme, designed to rapidly distribute funds to small businesses during Covid-19, typically offered 100% taxpayer-backed guarantees. However, Starling’s internal assessment revealed that a segment of these loans were approved without proper due diligence, meaning the bank itself must now absorb the £28 million cost, rather than the taxpayer. This is a significant admission given prior controversies.
Combined, the regulatory penalty and the BBL losses have reduced Starling’s profit for the year to March to £223 million, down from £301 million a year earlier. The bank is now publicly committed to enhancing its financial crime and risk management capabilities, aiming to move forward on a more secure footing after a challenging financial year.