Latest news with #CovidLoans
Yahoo
01-06-2025
- Business
- Yahoo
Starling pays out fivefold bonus sum despite FCA fine and Covid loan errors
Starling Bank has handed its staff an almost fivefold increase in bonus pay despite an embarrassing regulatory fine and losses on government-backed Covid loans that the digital lender has blamed on its own weak controls. The digital-only challenger bank paid out £24.6m in bonuses for the 2024-25 financial year, compared with £5.3m a year earlier. Starling's annual report showed the bank's remuneration committee approved a £600,000 bonus for its highest-paid director – believed to be the chief executive, Raman Bhatia – taking their total pay packet to £1.7m. It paid another £5.4m in bonuses to Starling's board members. The increase in the overall bonus pot – which paid out in both cash and shares – followed a difficult year for Starling, which was blighted by embarrassing revelations about the bank's internal controls. The bank reported last week it was taking a £28m loss on its Covid-era bounce back loans (BBLs) after conceding it had lent money to some businesses without proper checks. This meant the loans were unlikely to qualify for the 100% government guarantee, which would have meant taxpayers footed the bill. Starling was fined £29m by the Financial Conduct Authority in Octoberafter the watchdog discovered 'shockingly lax' financial crime controls at the bank. The FCA said Starling, which emerged in the mid-2010s, had 'left the financial system wide open to criminals and those subject to sanctions'. The fine and loan losses ate into the bank's annual profits, which tumbled 25% to £223m for the year to the end of March. Starling said the latest bonus pot did not take either the FCA fine or the Covid loan losses into account, given that they were 'legacy issues' that did not reflect the staff's recent performance. 'It is important to note that the scheme reflects performance over the past 12 months, which includes the effective management of legacy matters, progress against key regulatory programmes, and the group's broader commercial performance,' a spokesperson said. They added that a larger number of staff were taking part in its bonus schemes, which included a long-term incentive plan that was paid out in Starling shares. Bhatia told journalists last week that the bank might consider cutting or clawing back pay from executives over the FCA fine and Covid loan issue. 'We have discharged our duties to consider any impact on [remuneration] where appropriate. I can't share any further details,' Bhatia said. It was not clear whether that could impact Starling's founder and former chief executive, Anne Boden, who stepped down in 2023 citing a 'conflict of interest' between being a boss and a large shareholder in the bank. Bhatia took the helm midway through 2024. Sign in to access your portfolio
The Guardian
01-06-2025
- Business
- The Guardian
Starling pays out fivefold bonus sum despite FCA fine and Covid loan errors
Starling Bank has handed its staff an almost fivefold increase in bonus pay despite an embarrassing regulatory fine and losses on government-backed Covid loans that the digital lender has blamed on its own weak controls. The digital-only challenger bank paid out £24.6m in bonuses for the 2024-25 financial year, compared with £5.3m a year earlier. Starling's annual report showed the bank's remuneration committee approved a £600,000 bonus for its highest-paid director – believed to be the chief executive, Raman Bhatia – taking their total pay packet to £1.7m. It paid another £5.4m in bonuses to Starling's board members. The increase in the overall bonus pot – which paid out in both cash and shares – followed a difficult year for Starling, which was blighted by embarrassing revelations about the bank's internal controls. The bank reported last week it was taking a £28m loss on its Covid-era bounce back loans (BBLs) after conceding it had lent money to some businesses without proper checks. This meant the loans were unlikely to qualify for the 100% government guarantee, which would have meant taxpayers footed the bill. Starling was fined £29m by the Financial Conduct Authority in Octoberafter the watchdog discovered 'shockingly lax' financial crime controls at the bank. The FCA said Starling, which emerged in the mid-2010s, had 'left the financial system wide open to criminals and those subject to sanctions'. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion The fine and loan losses ate into the bank's annual profits, which tumbled 25% to £223m for the year to the end of March. Starling said the latest bonus pot did not take either the FCA fine or the Covid loan losses into account, given that they were 'legacy issues' that did not reflect the staff's recent performance. 'It is important to note that the scheme reflects performance over the past 12 months, which includes the effective management of legacy matters, progress against key regulatory programmes, and the group's broader commercial performance,' a spokesperson said. They added that a larger number of staff were taking part in its bonus schemes, which included a long-term incentive plan that was paid out in Starling shares. Bhatia told journalists last week that the bank might consider cutting or clawing back pay from executives over the FCA fine and Covid loan issue. 'We have discharged our duties to consider any impact on [remuneration] where appropriate. I can't share any further details,' Bhatia said. It was not clear whether that could impact Starling's founder and former chief executive, Anne Boden, who stepped down in 2023 citing a 'conflict of interest' between being a boss and a large shareholder in the bank. Bhatia took the helm midway through 2024.
The Guardian
28-05-2025
- Business
- The Guardian
Starling's profits dip 25% as bank takes blame for Covid loan losses
Digital bank Starling has suffered a 25% drop in annual profits and announced it would turn down government guarantees on £28m of Covid loans losses after conceding its own weak controls were to blame. The admission stirs up a long-running controversy over Starling's handling of the government-backed bounce back loan (BBL) scheme, which was built to get money quickly to small businesses during lockdown. The scheme offered loans of up to £50,000 at 2.5% interest but carried little risk, with taxpayers picking up 100% of losses if the companies defaulted. On Wednesday, Starling's chief executive, Raman Bhatia, said the bank had proactively reviewed some of the BBLs on its books, and conceded that a tranche of loans had been granted to applicants without proper checks. That meant they were unlikely to qualify for government guarantees, which might have otherwise seen taxpayers foot the £28m bill. 'In some cases, we think we may not have met all the procedures, all the requirements, of the scheme,' Bhatia told journalists during the conference call. He did not confirm whether Starling had discovered fraud or financial crime within that tranche of loans. It comes just months after Starling was hit with a separate £29m fine for 'shockingly lax' financial crime controls, which the City regulator said had left the financial system 'wide open to criminals and those subject to sanctions'. Together, the fine and BBL loss reduced Starling's profit for the year to March to £223m, down 25% from £301m a year earlier. Bhatia said the bank may consider cutting or clawing back pay from executives if appropriate. 'We have discharged our duties to consider any impact on [remuneration] where appropriate. I can't share any further details.' It is not clear whether that might impact Starling's founder and former chief executive, Anne Boden, who stepped down in 2023 citing a 'conflict of interest' between being a boss and a large shareholder in the lender. Starling's distribution of Covid loans gained heightened attention in 2022 when former minister Theodore Agnew accused Starling of using the BBL scheme as a 'cost-free marketing exercise to build their loan book and so their company valuation', and failing to properly review borrowers before handing out taxpayer-backed loans. Boden at the time vehemently denied Agnew's claims. Sign up to Business Today Get set for the working day – we'll point you to all the business news and analysis you need every morning after newsletter promotion Unlike large lenders, Starling opened BBL applications to new clients and saw its client base swell as a result. Its business customer base grew from 87,000 to 330,000: equivalent to adding 15,000 a month. And while the bank had only issued £23m of its own loans before the pandemic in November 2019, it had distributed £1.6bn in BBLs by the time the scheme closed in March 2021. Commenting on the Financial Conduct Authority (FCA) fine and the BBL loss on Wednesday, Starling's chief financial officer, Declan Ferguson, said: 'We continue to make significant investment into our financial crime resource to ensure our risk management and compliance capabilities are commensurate with the high-growth business and experience. 'Working closely with both the FCA and the British business bank, we have also sought to limit the impact of these issues and ensure they remain one-offs, but now we are now more confident we are moving forward into the next stage of our growth on much stronger foundations.'
The Independent
28-05-2025
- Business
- The Independent
Starling Bank profits slide after FCA fine and Covid loan issues
Starling Bank has revealed its annual profit fell by a quarter after being hit with a fine for weak financial crime controls and setting aside cash to cover issues with Covid bounceback loans. The bank reported a pre-tax profit of £223 million for 2024, down 26% from the £301 million made the prior year. It marks the company's fourth year in a row of profitability since launching a decade ago. The drop in profit was partly driven by Starling being fined £29 million by the UK's Financial Conduct Authority last year. The regulator described the bank's financial crime screenings as 'shockingly lax', leaving the system 'wide open to criminals and those subject to sanctions'. It was also found to have repeatedly breached a requirement not to open accounts for high-risk customers. Starling said it has learned lessons from the investigation and has built a stronger framework – but it still faces some restrictions in relation to banking with higher-risk customers. Profits were also dragged lower by the bank putting aside £28.2 million to cover a group of bounceback loans which it said 'potentially did not comply with a guarantee requirement'. Starling offered the loans to struggling businesses during the Covid pandemic as part of the Government-backed lending scheme, which guaranteed to cover any losses incurred by lenders. The bank said it agreed to remove the Government guarantee on the group of loans that had potential issues. Meanwhile, Starling revealed its revenues rose to £714 million, from £682 million in 2023, with the amount deposited by customers topping £12 billion. It also highlighted growth of its banking software platform Engine after ramping up investment and signing Salt Bank in Romania and AMP Bank in Australia as its first two customers. The London-based bank, which also has UK offices in Cardiff, Manchester, and Southampton, hired about 3,940 people on average last year – some 700 more than in 2023. This drove up staff costs by nearly a third year-on-year, while marketing spending reduced as bosses focused investment on financial crime controls. Chief executive Raman Bhatia said: 'In the last year we demonstrated our commitment to addressing legacy matters, investing in our people and capabilities so we now move forward from a position of strength. 'We will leverage our robust capital position to continue to scale our growth in the UK by helping our customers become better with money. 'We will also make great strides in turning Engine by Starling into a global success.'
Finextra
28-05-2025
- Business
- Finextra
Starling profit declines on FCA fine and Covid loan delinquencies
Starling Bank has reported a decline in full-year profits after booking exceptional charges against FCA non-compliance and Covid-era loans. 0 While the challenger increased revenue to £714m in the twelve months to 31 March 2025, from £682m in the prior year, profit before tax declined to £223m from £301m. The Financial Conduct Authority in October fined Starling Bank £29 million for failings related to its financial sanctions screening. The bank has also taken taken a £28.2m provision in this year's accounts after removing a Government-backed guarantee erroneously applied to some bounce back loans during the pandemic. Elsewhere, customer deposits rose to £12.1bn from £11.0bn - primnarily driven by a market-leading savings product - and open accounts inched up from 4.6m from 4.2m. While the bank views its Software-as-a-Service strategy as a future money-spinner, Engine's fee income contribution to the group was fairly modest at £8.7m.
