CAF Bank dismisses ‘theoretical losses’ concerns

Charities Aid Foundation has dismissed concerns in the media around its reporting of investment losses this year for its bank, reassuring customers that it will “get back everything it invested”.

CAF Bank annual report shows that “the fair value of unrealised loss on debt securities was £33.4m for the 12 months to April this year”, which is almost double the previous year’s figure of £17.4m.

The report adds that directors “consider it remote that the Bank would need to realise any of these unrealised losses”.

However, an article in the Financial Times reporting said the unrealised losses “echo recent problems at US regional banks including the now defunct Californian lender Silicon Valley Bank".

In response to these concerns, CAF chief executive Neil Heslop said: “Alongside the positive financial returns and strong capital surplus shown in the Bank’s annual report, it has reported some theoretical ‘paper’ losses on bond investments.

“The important fact is that these bonds will always be held until they mature, so the Bank will get back everything it invested – an approach endorsed by its independent auditors.

“As well as this, the Charities Aid Foundation has agreed additional funding that exceeds this theoretical loss when combined with the Bank’s already significant surplus regulatory capital.”

CAF Bank has more than 14,400 customers.

In its annual report its chair Janet Pope said: “The difficulties of the past few years have had a significant impact on many of the organisations we support.

“The Covid-19 pandemic, followed by sharply rising interest rates, the cost-of-living crisis and geopolitical upheaval, have resulted in more people looking to these organisations for help.

“In parallel, economic uncertainty has led to rises in operating costs and falling donations as household budgets have been stretched.

“For the charities we serve, we know we are more than a bank. We support them, we listen to them and, importantly, we act on what they tell us.”

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