Digital bank Starling is facing the financial consequences of its own operational shortcomings, as it confirms a £28 million loss from the government’s “bounce back loan” scheme. CEO Raman Bhatia openly admitted that “weak controls” within the bank led to these losses, and as a result, Starling will not be seeking government guarantees to cover the sum, effectively taking the blame.
The BBL scheme was designed to provide rapid financial support to small businesses during the pandemic, with 100% taxpayer guarantees. However, Starling’s internal review found that a portion of these loans were issued without proper checks, making them ineligible for the government’s safety net. This revelation follows previous accusations of Starling using the scheme as a “marketing exercise.”
This £28 million hit, combined with a recent £29 million fine for “shockingly lax” financial crime controls, has contributed to a 25% drop in Starling’s annual profits. The bank is now prioritizing significant investment in its financial crime and compliance capabilities to address these systemic issues and fortify its operational resilience.