Social banks profit from Icelandic crisis

Deposits rise in wake of banking collapse

Social banks have seen deposit levels shoot up in the wake of the Icelandic banking collapse.

CAF Bank, which is owned by the Charities Aid Foundation and accepts deposits only from third sector organisations, has taken record levels of deposits over the past month.

It took deposits of £21m in October, and savings with the bank rose by £100m to £977m in the year to the end of October 2008. This compares with a rise of £10.9m in the year to the end of October 2007.

A spokesman for Triodos Bank said it had had its "biggest ever monthly increase in deposits" in October, and had seen deposits rise to a level 10 per cent higher than its start- of-year predictions.

The Co-operative Bank said its deposits had risen by 40 per cent in the past year, and Unity Trust Bank said it had seen a 14 per cent increase.

Peter Mitchell, chief executive of CAF Bank, said he believed his bank's risk profile was among the main factors that had attracted added investment.

"It's not by chance we had no money with Icelandic banks," he said. "CAF Bank's risk ethos is in tune with the current risk approach of charities that are looking for safe and established havens for their deposits."

John Brooks, director of sales and marketing at Unity Trust Bank, said social banks had received more deposits because of a flight to quality.

"We acted as a bank should - safely, securely and prudently," he said.

The Co-operative Bank said it expected the social sector to receive a further boost when hundreds of thousands of savers with failed Icelandic banks sought to invest money returned under the Financial Services Compensation Scheme.

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