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Starling Bank’s profit fell by more than a quarter last year, because the digital bank has reserved £ 28 million to cover possible compliance issues with COVID-19 government-held loans and received a fine for lax checks of financial crime.
De Neobank said on Wednesday that his profit before taxes fell to £ 223 million in the year to the end of March, against £ 301 million in the previous 12 months, with an increase in income of 4.7 percent.
It said that the income was affected at the end of last year by a fine of £ 29 million from the British financial regulator for “shocking lax” protection against financial crime, as well as newly announced provisions for problems with some of his COVID-19 loans.
The bank admitted on Wednesday that some of the loans that the government supported by the government during the COVID-19 Pandemie extensively “may not comply with a warranty requirement”.
Starling was criticized for a sense of credit during the crisis, in which a portfolio of loans was built up to new customers who had a guarantee of 100 percent of the British business bank, subject to suitability. The “Bounce Back” loans were provided by banks to quickly support wrestling companies during the pandemic, and grew into a considerable part of Starling’s credit book.
But the scheme has since been examined, with the government in 2022 estimating that no less than £ 4.9 billion of the £ 47 billion by banks was lost by fraudsters between May 2020 and March 2021.
Starling said it had communicated his discovery that some of the loans may not comply with the [British Business Bank] And “signed up to remove the government guarantee for those loans”, which resulted in a provision of £ 28.2 million that is equivalent to about 2 percent of lending under the government schedule.
It added “can be exposed to further risks that result in non-compliance with the suitability requirements” that can influence the ability to claim under the warranty contract or “retain payments that are already claimed under the warranty contract”.
Part of the concern about Starling’s pandemic loans was that it had quickly provided loans to companies that were not yet customers, while they had little experience with borrowing, which made the door possible for fraudulent companies that have been set up with the sole purpose of benefiting from the scheme.
The Financial Times reported earlier that Starling pursued various debtors who never exhibited signs of active trade, because it had submitted various exciting petitions against companies that were in default.
“We were the only ones who accepted new bank customers [as part of the bounce back scheme]’Recognized Chief Executive Raman Bhatia, who took over last year after founder Anne Boden resigned.
The new Chief Executive, which previously led energy supplier OVO, said that the bank had invested in stimulating its senior management team and financial crime processes.
“In the past year we have demonstrated our dedication to tackle legacy cases, to invest in our people and capacities, so we are now going further of a position of strength,” Bhatia said.