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Starling Bank resumes discussions on Irish banking license as lockdown eases

Starling Bank Ltd. has resumed discussions with the Central Bank of Ireland about obtaining an Irish banking license as U.K. lockdown restrictions ease.

The U.K.-based digital bank is expected to expand internationally by 2021, CEO Anne Boden said in a letter to investors. Its launch in Ireland will act as a springboard to further expansion in Europe, beginning in the Netherlands, France and Germany. The bank raised £60 million for its expansion into Ireland, but talks were stalled due to the coronavirus crisis.

Despite the pandemic, Boden said investors were able to help the bank raise £100 million since the end of the financial year, Nov. 30, 2019, bringing its total raised to date to £363 million.

The bank was able to open more than 1.5 million accounts and it had about £3 billion on deposit as of the end of July, compared to 926,000 retail accounts opened, including 82,000 business and sole trader accounts, and £1 billion on deposit at the end of November 2019.

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The number of customers using their account grew daily by more than 60% between the end of 2019 and July 2020. Typical active retail customers credit and debit their accounts by more than £1,500 per month, while the figure is more than £6,500 for typical active small and medium-sized enterprise customers, Boden said. The annualized revenue run rate increased to £80 million as card volumes were back to pre-lockdown levels, despite the coronavirus crisis leading to a drop in interchange income for several weeks.

Boden noted Starling Bank's loan book increased to more than £1 billion from below £100 million. It has lent to more than 25,000 SMEs under the Coronavirus Business Interruption Loans Scheme, or CBILS, and Bounce Back Loans Scheme and provided £300 million of CBILS lending to small businesses as part of its partnership with Funding Circle.

Starling also plans to apply for a further grant of either £35 million or £25 million from a fund created to increase competition in the market for SME banking. The bank was awarded £100 million under this grant last financial year. Boden said they will use it to target larger SMEs and those with more complex ownership structures, as well as non-profits, should the application be successful. She added the bank will also invest a significant amount of its money in its expansion plans.