Anne Boden to step down as Starling chief to avoid potential conflict of interest

The founder of Starling Bank, Anne Boden, is stepping down as chief executive in a surprise announcement she said was to remove any potential conflict of interest from her being a significant shareholder in the fintech.

Boden, who owns 4.9 per cent of the bank she founded in 2014, said she would step down at the end of June following discussions with the board about the risk of a conflict. She said she had initiated those talks about six months ago.

“Modern-day governance is all about the board setting the strategy and the chief executive carrying it out,” said Boden on Thursday. “As a major shareholder, that’s very difficult to do if you’re also chief executive.”

She added that UK regulators had not raised her stake in the bank as an issue.

Boden is the latest in a long line of UK fintech bosses to leave their positions including Tom Blomfield, who founded rival Monzo, and Wise co-founder Taavet Hinrikus, who stepped down as chair of the payments company to strengthen its governance ahead of its 2021 public listing.

Chief operating officer John Mountain will take over as interim chief executive when Boden leaves, said Starling, as it reported a record six-fold increase in pre-tax profits to £195mn in the year to March 2023 while revenues more than doubled to £453mn.

Mortgage growth helped to drive the results, with total mortgage lending hitting £3.4bn, compared with £1.2bn in the same period last year. Starling acquired buy-to-let mortgage provider Fleet Mortgages in July 2021 and the loan portfolio of specialist lender Masthaven last June.

Starling said on Thursday that it that state-backed bounce back loan now made up 19 per cent of its current lending portfolio, compared to more than 40 per cent at its last results in July 2022. Chief financial officer Declan Ferguson said that the loans were “performing in line with our expectations and we have no concerns”.

The bank has sparred with former anti-fraud minister Lord Agnew over its involvement with the state-backed bounce back loan scheme. Agnew accused the bank of not having strict enough anti-fraud checks, a position which Starling has consistently denied. Boden said last July that “did all the checks necessary and more, and did a really good job.”

Like other lenders, Starling’s results were boosted by rising interest rates. The Bank of England lifted interest rates to 4.5 per cent in May, the highest level since 2008, as it battles persistent inflation.

Starling’s net interest margin — the difference between the interest received on loans and the rate paid for deposits — increased 145 basis points to 2.72 per cent.

Boden also said that while the bank was still looking to go public, it would wait until the challenging macroeconomic environment had settled.

“IPO markets are closed and we don’t really know when they’re going to open,” she added. “Starling has always felt that its peers, the big banks, are listed and therefore we probably need to be listed just like them, but we’re in no hurry.”

Boden said last July that Starling was thinking about an IPO “maybe [in] 2023, probably 2024”.

The company last secured a £2.5bn price tag in April 2022 after a £130.5mn funding round from existing investors, significantly smaller than UK-headquartered fintech Revolut, which was valued at $33bn at its last funding round in July 2021, or Monzo, valued at $4.5bn in December 2021.

Starling’s default listing venue would be the UK, Boden added. London’s limited ability to keep homegrown tech companies intending to go public has been a source of consternation, with the Financial Conduct Authority proposing sweeping changes to the listing regime in May.