The Church of England Pensions Board has today announced that it has entered into a £50m loan agreement with Santander Corporate Banking to provide the finance needed over the next 3-4 years to assist clergy with their retirement accommodation. It is envisaged that further tranches of finance will be arranged in the future to enable the scheme to continue.

The loan will enable the Board to continue to provide assistance to clergy through the existing CHARM (Church Housing Assistance for Retired Ministry) scheme where they have been unable to make their own provisions.  Assistance is available on two bases; houses for rent and a shared ownership scheme for clergy with capital to invest in their retirement accommodation.  Around a third of retiring clergy currently make use of the CHARM scheme (around 100 per year).

The loan facility with Santander replaces the facility which has been provided by the Church Commissioners since the inception of the scheme in 1983.

The loan facility was arranged by corporate finance firm TradeRisks, which also advised the Board on its options for financing the scheme.

Shaun Farrell, the Board's Chief Executive, said today:

"I am delighted that we have been able to secure new financing for the scheme which represents an important facility for clergy where they need assistance with their retirement accommodation.  This is especially important at a time when we are having to review the clergy pension scheme to make it affordable for the future. We look forward to working with Santander Corporate Banking in the future".

Paul Stevens, Head of Housing Finance at Santander Corporate Banking, said:

"This loan arrangement demonstrates our ability to deliver efficient and effective funding solutions and builds on our wider commitment to financing affordable housing across the UK. We are delighted to have established this relationship with The Church of England Pensions Board".

Notes for editors

1. Under the rental section of the scheme retiring clergy are expected to consider one of the vacant properties already owned by the Pensions Board.  If no suitable properties are available the Board will purchase one in the area of choice provided it meets certain criteria.  The purchase limit is £200,000 increased to £225,000 in the South East Counties.  Under this section of the scheme retired clergy pay a rent which is capped at 30% of their total (joint) gross income from all sources.

2. As a result of the rent capping system referred to above, the rental section of the scheme is subsidised, currently to the tune of £3.25m p.a.  This subsidy is financed by the wider church through the dioceses.

3. Under the shared ownership section of the scheme the Pensions Board will invest up to £150,000 in a retirement property.  The occupant's own capital investment is secured by way of a long lease on the property.  Occupants pay a rent based on the Board's capital investment plus a service charge to cover ongoing repairs, maintenance and insurance.

4. The Church Commissioners' decision to cease funding new acquisitions under the scheme with effect from 1 July 2010 was taken on investment grounds i.e. to ensure that they did not become over-exposed to one particular asset class.  Their existing investment in the scheme, amounting to around £200m will remain in place but will reduce as the 800 properties they have financed are sold.

Banco Santander (SAN.MC, STD.N, BNC.LN) is a retail and commercial bank, based in Spain, with presence in 10 main markets. At the end of 2009, Santander was the largest bank in the euro zone by market capitalization and third in the world by profit. Founded in 1857, Santander had EUR 1,245 billion in managed funds at the end of 2009. Following the acquisition of Sovereign Bancorp of the U.S. in January 2009, Santander has 90 million customers, 13,660 branches - more than any other international bank - and 170,000 employees. It is the largest financial group in Spain and Latin America, with leading positions in the United Kingdom and Portugal and a broad presence in Europe through its Santander Consumer Finance arm. In 2009, Santander registered €8,943 million in net attributable profit.

In the UK, Santander Corporate Banking was established June 2009. The corporate banking division supports businesses with a turnover over £1 million via the bank's 20 regional corporate banking centres, which are located around the UK.

About TradeRisks

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