Profit Plunge: Starling Bank Pays Price for Covid Loan Control Failures

Starling Bank’s annual profits have taken a devastating 25% hit following the company’s admission that weak internal controls led to £28 million in questionable Covid loan approvals, marking one of the most significant self-inflicted wounds in recent fintech history. The digital lender’s decision to waive government protection on these loans demonstrates both corporate responsibility and the true cost of compliance failures.
The controversy surrounding Starling’s handling of bounce back loans has been brewing since 2022, when former minister Theodore Agnew accused the bank of exploiting the emergency lending scheme for commercial gain. The bank’s founder, Anne Boden, had previously rejected these claims, but new CEO Raman Bhatia has now conceded that the criticism had merit, acknowledging that proper vetting procedures weren’t consistently followed.
This admission comes at a particularly challenging time for Starling, which is also grappling with a £29 million fine for inadequate financial crime controls. The combined impact has reduced the bank’s annual profits to £223 million, down from £301 million the previous year, while raising fundamental questions about the sustainability of rapid growth strategies in the heavily regulated banking sector.