- This story has been corrected; please see final paragraph
In a statement made today, the Charity Commission said that it had approved changes to the Charity Bank’s articles to allow it to continue to operate as a bank and assist charities. The bank’s income for the past financial year was £4.9m.
Changes to banking regulations mean that it is not possible for Charity Bank, which registered as a charity in 2002 and lends only to charities and social enterprises, to continue both as a charity and as a bank.
The commission said that under the Charities Act 2011, certain assets held by Charity Bank must continue to be used to further the charitable purposes of the former charity.
To make sure this happens, the assets have been transferred to CAF to be held on trust for the current charitable purposes of Charity Bank.
But financial regulations mean that Charity Bank will have sufficient capital only if it continues to hold the assets. So to ensure that Charity Bank has enough capital to continue as a bank, CAF will make a capital grant to Charity Bank as a social investment to further the charitable purposes for which the assets are held, the commission said.
George Blunden, chairman of Charity Bank, said in a statement: "The restructuring of Charity Bank will enable us to expand our lending to charities and social enterprises by raising conventional equity capital from mission-driven investors.
"We will not change the fundamental principles behind Charity Bank. We have put in place a ‘mission lock’ requiring holders of at least 90 per cent of the bank’s ordinary share capital to approve any amendments to our existing charitable purpose, which has been enshrined in our amended articles of association."
Kenneth Dibble, chief legal adviser to the Charity Commission, said in a statement: "We believe that this approach is not only in the interests of the furtherance of Charity Bank’s former charitable purposes, but is also in the interests of charities that benefit from its services. The closure of Charity Bank would have represented the loss of a useful resource for the furtherance of charitable purposes more generally."
- The original story said that the charitable assets of Charity Bank were due to be transferred to the Charities Aid Foundation. A Charity Bank statement did not give a date, but it has now said the assets were actually transferred on 31 May. A statement from the Charity Commission did not give a date and said the assets "will be transferred".