Starling Bank Profits Dip 25%: Blames COVID Loan Losses & FCA Fine
In 2024, Starling Bank saw a big dip in its profits, down by 25%. That’s a huge drop for a fast-growing digital bank. The reason? A mix of COVID loan troubles and a fine from the UK’s financial regulator.
We all know how tough the pandemic was. Starling gave out many loans to help small businesses stay alive. But now, they’re facing losses because some of those loans didn’t follow the rules. The government won’t cover them, so Starling has to pay the price.
On top of that, the bank was hit with a £29 million fine. Why? Because it failed to spot risks like money laundering. That’s a big red flag for any bank. This situation is a wake-up call. We can learn a lot from it about how banks must stay careful, even while trying to grow fast.
Let’s explore what went wrong, how it happened, and what it means for the future of digital banking.
Impact of COVID-19 Bounce Back Loans
During COVID-19, the UK government started the Bounce Back Loan Scheme to help small businesses. Starling Bank gave out many of these loans.
Later, Starling found that some loans made before April 2021 broke the rules. These loans could not get help from the government. So, the bank removed the guarantees. It took a £28 million loss. It did not make taxpayers pay for it.
In 2022, a former minister, Theodore Agnew, said Starling used the loan plan to grow fast. Starling’s founder, Anne Boden, said this was not true. But the bank’s business customer numbers did grow a lot during that time.
FCA Fine for Financial Crime Control Failures
The FCA fined Starling Bank £29 million for weak checks on financial crimes. This was the first fine of its kind for a digital bank in the UK.
The bank failed to properly check customer names against lists of banned people. This made the banking system less safe.
From September 2021 to November 2023, Starling opened over 54,000 accounts for 49,000 risky customers. This broke a deal they had with the FCA.
Since 2017, Starling’s system has not fully checked for banned names. The FCA found big problems in how the bank stopped crime. The bank lacked skilled leaders and strong safety systems. Starling has admitted its mistakes and is now fixing them.
Starling’s Response and Future Outlook
Starling is now working hard to fix its past mistakes. The bank has spent a lot of money to make its safety and risk systems better.
It checked all customer accounts and past transactions. New rules and safety steps are now in place. The board is also more active in watching over these changes.
Even with these problems, more people are still joining Starling. The bank is also thinking about new projects and may go public in the future.
Wrap Up
Starling Bank’s drop in profits shows how important strong safety and rule systems are, especially when a bank grows fast.
The bank is now taking smart steps to fix past problems. This shows it wants to keep people’s trust and stay strong in the money world.
Frequently Asked Questions (FAQs)
Starling Bank is still making money, but its profits dropped by 25%. It lost money from bad COVID loans and a big fine from the UK regulator.
Yes, Starling Bank is fully covered and regulated by the Financial Conduct Authority (FCA). The FCA checks that banks follow the rules and protect customers.
Starling Bank made £223 million in profit last year. This is less than the year before, when it made £301 million. The drop came from loan losses.
Starling was fined £29 million by the FCA. It failed to check customers properly for money laundering and other financial crimes. It has promised to fix this.
Disclaimer:
This content is for informational purposes only and not financial advice. Always conduct your research.