Starling's Major Investor Withdraws Backing for London IPO
In a significant development for the UK's financial technology sector, Starling Bank's principal investor has withdrawn his support for the digital bank pursuing a London initial public offering. Harald McPike, the elusive billionaire who provided crucial early funding, has reportedly grown frustrated with the pace of regulatory reforms in the City, leading to this strategic shift.
Regulatory Frustrations Prompt Change of Heart
McPike, who invested $70 million in Starling during its infancy in 2016 and retains approximately a one-third stake according to Companies House filings from February 2025, had previously advocated strongly for a London listing. However, sources familiar with his thinking indicate that dissatisfaction with progress on City regulation reforms has prompted this reversal.
"Things will have to move a lot faster or it is out the door sharply," a person close to McPike's perspective revealed. The Bahamas-based investor now believes Starling is warming to a US listing, an option he had previously resisted.
Shifting Tone from Starling Leadership
Over the past year, Starling's public statements regarding its IPO plans have become increasingly non-committal. Financial chief Declan Ferguson stated last summer that there was no "concrete view" on where the neobank would list and that any decision remained "in flux." This represents a departure from earlier positions, when interim chief John Mountain described London as a "natural home" for the fintech.
In a January interview with the Sunday Times, chief executive Raman Bhatia remained "non-committal" about listing venues, noting that an IPO wasn't expected in the short term. "Ultimately it's a decision for shareholders, so we have not concluded on that," he explained.
Regulatory Challenges Facing Challenger Banks
McPike's frustration represents a setback for Treasury efforts to position London as an attractive venue for scale-up companies through regulatory simplification. While the Bank of England increased the threshold for MREL (minimum requirement for own funds and eligible liabilities) last year, those close to the matter suggest McPike believes the adjustment from £20bn-£30bn to £25bn-£40bn fails to sufficiently address concerns.
Additional regulatory hurdles include:
- The internal ratings based approach that historically disadvantages challenger banks
- Requirements for decades of downturn data that new entrants cannot provide
- Concerns raised by industry body Innovate Finance about an "uneven playing field"
Recent Regulatory Troubles for Starling
The digital bank has faced significant regulatory challenges over the past year, including:
- A £29 million fine from the City watchdog for "shockingly lax" financial controls
- Heavy losses on the Covid loan scheme, with the bank taking a 25% profit hit after declining £28 million in government guarantees
- Accusations from peers about using the scheme as a "cost-free marketing exercise"
Strategic Expansion and Future Direction
Despite these challenges, Starling continues its strategic expansion, with sources describing its US expansion as proceeding at an "accelerated pace." The bank is reportedly considering purchasing a US lender as a pathway to obtaining American banking licences.
A Starling spokesperson stated: "As a significant international investor, Harry McPike has meetings with UK officials on his own account. Starling welcomes the Bank of England's recent update to its MREL framework and continues to maintain regular, constructive dialogue with its regulators."
The spokesperson added that the bank "welcomes the reforms the LSE is undertaking" and will be "studying" their impact in coming months, while emphasising that "right now we are focused on the execution of our growth strategy rather than on the timing or location of an initial public offering."
The McPike Global Family Office, which manages McPike's investment activities, declined to comment on the situation.
