CAF Bank has defended its financial position after a national newspaper reported it had made “significant paper losses” on investments last year.
The Financial Times reported over the weekend that CAF Bank, which supports more than 14,000 charities, had “amassed significant paper losses on its bond holdings in the wake of rising interest rates”.
It said the organisation’s bond holdings were £33.4m lower than their book value and likened its financial position to a failed US lender.
“The unrealised losses echo recent problems at US regional banks including the now defunct Californian lender Silicon Valley Bank,” the FT reported.
But Neil Heslop, chief executive of the Charities Aid Foundation, which owns CAF Bank, said: “Everyone in the sector knows the valuable work that CAF Bank does to help charities serve their communities.
“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.”