UK fintech Starling withdraws European bank license application

London — UK digital bank Starling has closed its bid to obtain a European banking license, bringing a major setback in its international expansion ambitions.

The company told staff on Monday that it had withdrawn its bank license application from the Central Bank of Ireland four years after starting the process. Sterling applications have faced problems in the past. Digital lenders temporarily suspended negotiations with regulatory agencies in 2020 due to the Covid-19 pandemic.

Starling will instead focus on selling software products as a service aimed at supporting banks’ digital transformation strategies and expanding into new lending areas, CEO Anne Boden told staff in a note on Monday. rice field.The memo is First reported Confirmed by Sky News and then by a Starling spokesperson on CNBC.

The news has hit Sterling’s plans to expand in Europe.Supported by something like Goldman Sachs Qatar’s sovereign wealth fund, Sterling, has won investment from such prominent investors with the promise of success in countries other than the domestic market.

Starling is one of the UK’s largest dedicated online banks, with over 3 million customers, 500,000 of which are businesses. It competes with a number of popular FinTechs in the country, such as Revolut and Monzo, and Goldman, a unique investor that offers savings accounts through a digital banking brand called Marcus.

Citizens were finally valued at £ 2.5 billion ($ 3 billion) in April, double the value of the 2021 funding round.

FinTech has been struggling in both the public and private markets, and Sweden buys it now and pays later company Klarna to see its reputation recently. 85% drop From $ 45.6 billion last year to $ 6.7 billion.

Sterling said he intends to pursue expansion in Europe only through software transactions with other lenders, not his own retail banking brand.

“Ultimately, I felt that the Irish subsidiary wouldn’t provide the value we were looking for,” Bowden said in a memo on Monday.

“From now on, we will focus on providing software to banks around the world through Engine, a subsidiary of Software as a Service, and by expanding lending to various asset classes, including targeted M & A activities. “She added.

Starling acquired mortgage expert Fleet Mortgages for £ 50m in July 2021.

The company was recent Subject of criticism From Sir Agnew, a former British Minister, questioned the development of a government-sponsored lending scheme aimed at helping businesses through the coronavirus crisis.

Agnew, who resigned from the anti-fraud minister this year because of the government’s handling of Covid loan fraud, called Sterling the “worst” criminal when checking companies applying for the government’s £ 47 billion bounce back loan program. I called him one of them. The government has promised that the lender will provide 100% support for the loan in case the company fails to repay.

Bowden Counterattacked Agnew’s claimCalling them “harmful” and “barbaric accusations,” they threaten legal action against politicians if they do not withdraw their comments.

The Covid loan program has significantly boosted Sterling’s bottom line. Incubator Bank of Japan posted a marquee profit in October 2020 after a significant increase in lending activity. Bank loans rose from almost £ 2.2 billion between 2019 and 2021. Sterling will announce the latest full-year financial results this week.