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 TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionThe 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.
Thames Water preferred bidder KKR pulls out of rescue deal
The US private equity group KKR has pulled out of a deal to inject fresh equity into Thames Water, leaving the troubled supplier’s future in doubt and increasing the prospects of a temporary nationalisation.The UK’s biggest water supplier had picked KKR as its preferred partner, but the company “indicated that it will not be in a position to proceed”, Thames Water said.MPs said Thames Water was now in a “perilous position”, with some calling for the government to place it into a special administration regime (SAR), in effect a temporary nationalisation.However, the environment secretary, Steve Reed, told parliament he expected the firm to continue to pursue a “market-led solution” of obtaining new funding from its creditors, although he acknowledged the government “stands ready to intervene with a SAR” if required.Thames Water, which serves 16 million customers in London and south-east England, has the biggest debt burden – about £20bn – of any water company in Britain
UK interest rates more uncertain due to Trump policies, says Bank governor
The Bank of England governor, Andrew Bailey, has told MPs that the future path of interest rates in the UK has become more uncertain because of Donald Trump’s chaotic trade policy.Asked about the impact of on-off tariffs for the Bank’s policymaking by the cross-party Treasury select committee, Bailey said “the path remains downwards, but how far and how quickly is now shrouded in a lot more uncertainty, frankly”.The Bank’s nine-member monetary policy committee (MPC) has cut interest rates four times – to 4.25% – since last summer, as inflation has slowed.Bailey said some businesses were telling the Bank that they were pausing investment because of the uncertainty around trade barriers
AI pioneer announces non-profit to develop ‘honest’ artificial intelligence
An artificial intelligence pioneer has launched a non-profit dedicated to developing an “honest” AI that will spot rogue systems attempting to deceive humans.Yoshua Bengio, a renowned computer scientist described as one of the “godfathers” of AI, will be president of LawZero, an organisation committed to the safe design of the cutting-edge technology that has sparked a $1tn (£740bn) arms race.Starting with funding of approximately $30m and more than a dozen researchers, Bengio is developing a system called Scientist AI that will act as a guardrail against AI agents – which carry out tasks without human intervention – showing deceptive or self-preserving behaviour, such as trying to avoid being turned off.Describing the current suite of AI agents as “actors” seeking to imitate humans and please users, he said the Scientist AI system would be more like a “psychologist” that can understand and predict bad behaviour.“We want to build AIs that will be honest and not deceptive,” Bengio said
‘Nobody wants a robot to read them a story!’ The creatives and academics rejecting AI – at work and at home
Is artificial intelligence coming for everyone’s jobs? Not if this lot have anything to do with itThe novelist Ewan Morrison was alarmed, though amused, to discover he had written a book called Nine Inches Pleases a Lady. Intrigued by the limits of generative artificial intelligence (AI), he had asked ChatGPT to give him the names of the 12 novels he had written. “I’ve only written nine,” he says. “Always eager to please, it decided to invent three.” The “nine inches” from the fake title it hallucinated was stolen from a filthy Robert Burns poem
England v West Indies: hosts chasing 246 in shortened third men’s cricket ODI – live
Jayden Seales back into the attack and he outfoxes Buttler with a slower ball cutter that thwocks Buttler square in the ribs. That’s gonna smart. Buttler takes a second to get his breath. Seales spears in a bouncer as he saw Buttler on the charge to the next ball, it’s too short though and called a wide.Six to win… you guessed it – Jos Buttler nails the next ball into the stands for SIX! Clattered over square leg, Buttler and Seales exchange a smile and a back-pat
England cricketers forced into emergency travel plans before third West Indies ODI
It was not quite a case of planes, trains and automobiles but bikes, buses and by foot after the players and staff of England and West Indies were forced to take extreme measures to negotiate traffic on the way to the third one-day international at the Oval.The England and Wales Cricket Board blamed “heavy traffic north of the river” – there was talk of broken down buses, a traffic light failure and extensive roadworks – for the delayed arrivals of both squads. England abandoned the team bus as it sat stationary midway between their Kensington hotel and the ground, completing their journey on Lime bikes, on foot or by train – Jamie Smith took the underground option, while there were confused looks from fans walking down Kennington Park Road in the direction of the ground about 45 minutes before the scheduled start, perhaps thinking they themselves were running a bit late, as Joe Root and Adil Rashid strode past them. “We were on the bus for a while, then we all decided to get off and get on some Lime bikes,” the England captain, Harry Brook, said.The tourists stayed on their coach as it crawled the 3
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