Charity Bank seeks more freedom to raise capital

It applies to the Charity Commission for a change in its governing documents

Malcolm Hayday, chief executive of Charity Bank
Malcolm Hayday, chief executive of Charity Bank

Charity Bank has applied to the Charity Commission to change its governing documents so it can have more flexibility to raise capital in future.

Malcolm Hayday, chief executive of the bank, said the organisation would like to relax the rules about payments it can make to shareholders.

At present, the bank has a 10 per cent cap on dividends it pays to shareholders, which the bank wants to amend, according to Hayday. He did not specify how much the bank wanted the cap changed.

Hayday said the bank had to comply with new Europe-wide rules governing the level of capital banks must hold. But he said the changes the bank had requested were not primarily to comply with these rules, but "to make the bank’s governing documents fit for the 21st century".

He said: "This isn’t something that will affect us as we stand. We’re able to make loans and take deposits – but it’s something that might affect our ability to grow in the future, if we become a much bigger bank than we are today.

"We want the flexibility because no one knows what demands we will face in the future."

John Low, chief executive of the Charities Aid Foundation, said that CAF Bank and Charity Bank had recently discussed a merger, but had ruled it out. However he said the two banks would collaborate more closely.

He said that discussions over a merger were not connected to Charity Bank's decision to see a relaxation of the rules governing its dividends.

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