Digital bank Starling is facing the fallout of £28 million in losses from the government’s “bounce back loan” scheme, a sum it has accepted will not be covered by taxpayer guarantees.12 The bank’s CEO, Raman Bhatia, has explicitly stated that inadequate internal checks during the loan application process were the root cause, invalidating their eligibility for government indemnity.
The controversy surrounding Starling’s handling of these loans, which were intended to provide quick relief to small businesses during the pandemic, has been ongoing. While the scheme offered 100% government guarantees, Starling’s proactive review unearthed a tranche of loans that did not meet the necessary procedural requirements. This admission directly contradicts previous denials from the bank regarding its BBL practices.
This significant loss, coming shortly after a £29 million regulatory fine for “shockingly lax” financial crime controls, has collectively contributed to a 25% reduction in Starling’s annual profits, now standing at £223 million. The bank is now focused on strengthening its compliance and risk management frameworks to prevent similar occurrences and pave the way for more stable future growth.