Saturday, February 04, 2006

Charity Bank? Linklaters leads the way.

Global law firm Linklaters has provided pro bono assistance to Charity Bank, the world's first registered general charity and authorized bank, to create a new tier of capital to underpin its growth with the support of two of the UK's leading foundations. This is a great example of lawyers making a real difference in a deal structured for the common good. Lawfuel reports:

Esmee Fairbairn Foundation and Northern Rock Foundation have each subscribed £500,000 of 10 year subordinated convertible loan stock. The bank is paying 4% per annum for the funds. For the next five years this will count towards the capital Charity Bank needs to support its growing lending business. Documentation for this unique transaction was prepared on a pro bono basis by leading global law firm, Linklaters.

Chief Executive of Charity Bank, Malcolm Hayday, acknowledges that if community development finance is to move from the margin to the mainstream in the UK, it has to be adequately capitalised. "The ability to attract capital from socially motivated individuals, trusts and institutional investors is a major challenge for all of us," he added.

Ron Clarke, Finance Director of Esmee Fairbairn said that "the Foundation has been a long term supporter of Charity Bank and we are pleased to be able to extend our support." Fiona Ellis, Director of Northern Rock Foundation added "Charity Bank has offered the Foundation a welcome opportunity to invest some of our reserve in direct pursuit of our mission. We are delighted to be able to use our resources in as many ways as possible to help charitable organisations."

While such transactions are common place in the public and private financial markets, this is believed to be the first for a UK CDFI. There was no template documentation to show prospective investors but leading global law firm, Linklaters rose to the challenge. Linklaters capital markets partner, Jim Rice, was delighted to be able to bring his firm's knowledge of the markets and the regulatory environment to structure a deal for the common good. "We are very pleased to have been able to support this highly innovative capital transaction which will enable Charity Bank to extend finance to more social enterprises."

To find out more about Charity Bank visit or telephone 01732 774040.


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