Major banks create charitable trusts to raise funds but have not donated to the charities
Accountancy Age, 05 Dec 2007
The UK's major banks have raised tens of billions of pounds in funds by exploiting a loophole in the charity trust laws.
Concerns had been raised over Northern Rock's charitable trust Granite, through which the bank raised funds against its mortgages but has not paid anything to its nominated charity.
It has now been revealed that 11 other major high street financial institutions are operating similar schemes, through which they have raised funds on the back of £234bn of home loans, reported The Guardian.
The use of the trusts is controversial, as the trusts are kept off the balance sheet.
Most do not name the charity that is the supposed beneficiary. Only Abbey and Bradford & Bingley said they had had made donations to their charity.
Treasury select committee chairman John McFall said that if charities' names were being used then it must be clear who they were, 'otherwise it could be seen as identity theft'.
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