Starling Bank’s plans for a London initial public offering (IPO) are in doubt as its billionaire backer, Harald McPike, grows frustrated with the pace of regulatory reforms. McPike, who initially supported a London listing, is now reportedly considering a move to New York for the highly-anticipated IPO. This shift comes amid concerns about the UK’s regulatory environment, which has been criticised for its slow progress in reforming City regulations.
McPike, who invested $70 million in Starling in 2016 and holds a significant stake, is increasingly open to a US listing. This marks a departure from the bank’s previous stance, where it expressed a strong commitment to a London IPO. Financial Chief Declan Ferguson recently indicated that the decision remains uncertain, while CEO Raman Bhatia has been non-committal regarding the listing venue.
Regulatory challenges have plagued Starling, with frustrations over the UK’s regulatory framework being a significant factor. The Bank of England’s recent increase in the minimum capital requirements for lenders has not alleviated concerns, as McPike believes the changes do not sufficiently address the issues faced by mid-sized banks. Additionally, the internal ratings-based approach continues to disadvantage newer banks, requiring extensive historical data that is challenging for new entrants to provide.
Starling has faced other regulatory hurdles, including a £29 million fine for inadequate financial controls and losses related to the Covid loan scheme. Despite these challenges, the bank remains focused on its growth strategy and is monitoring the impact of ongoing reforms by the London Stock Exchange.
A Starling spokesperson stated that McPike maintains regular discussions with UK officials and that the bank welcomes recent updates to the regulatory framework. The timing and location of an IPO will ultimately be a decision for the Board, as the bank continues to prioritise its strategic growth objectives.
