In a rare moment of corporate accountability, Starling Bank’s chief executive has publicly admitted the company’s failure in managing government-backed Covid loans, resulting in a devastating £28 million loss that the bank will absorb entirely. Raman Bhatia’s candid acknowledgment marks a significant moment in the ongoing debate about digital banks’ role in emergency lending programs.
The confession comes as Starling faces mounting pressure over its handling of the bounce back loan scheme, which was designed to rapidly deploy financial support to struggling businesses during lockdown. Critics, including former minister Theodore Agnew, had previously accused the bank of treating the scheme as a “cost-free marketing exercise” to artificially inflate its valuation and customer base.
Combined with a separate £29 million fine for inadequate financial crime controls, these setbacks have reduced Starling’s annual profits by a quarter, raising questions about the sustainability of rapid growth models in the fintech sector. The bank’s leadership is now considering executive pay reductions while implementing stronger compliance measures to prevent future regulatory issues.