In a notable move, Starling Bank has announced it will not pass on £28 million in Covid-19 “bounce back loan” losses to taxpayers, openly accepting blame for the financial shortfall. CEO Raman Bhatia stated that the bank’s own “weak controls” during the loan approval process meant these loans did not qualify for government guarantees.
The “bounce back loan” scheme was a government initiative to quickly infuse funds into small businesses during the lockdown, with taxpayers guaranteeing 100% of loan defaults.30 However, Starling’s internal review revealed that certain loans were granted without proper adherence to the scheme’s requirements, making them the bank’s responsibility. This candid admission marks a shift in their stance on the BBL controversy.
This £28 million loss, alongside a recent £29 million fine for inadequate financial crime controls, has contributed to a 25% decline in Starling’s annual profits. The bank is now focused on reinforcing its risk management and compliance frameworks to prevent future occurrences and ensure a more secure financial future.