Issue - meetings

TREASURY MANAGEMENT STRATEGY STATEMENT

Meeting: 06/02/2012 - Overview and Scrutiny Committee (Item 93)

93 TREASURY MANAGEMENT STRATEGY STATEMENT pdf icon PDF 711 KB

To consider the Council’s Treasury Management Strategy Statement before its final approval by Full Council.

Additional documents:

Minutes:

The Committee considered a presentation on the Council’s responsibility for treasury management. Members were responsible for setting the rules for the borrowing and the investment of the Council’s cash. This treasury management role included:

  • Following  CIPFA guidance,
  • Setting prudential indicators (limits for borrowing and investing),
  • Taking an assessment of the risks
  • Having a strategy for borrowing,
  • Deciding the types of investments the Council will make to keep money accessible but   with a return at the same time,
  • Monitoring and setting investment limits relating to surplus cash,
  • Dealing with maturing debt in a cost effective way.
  • Deciding on a list of counterparties that the Council will invest with(The Council will obtain external advice from treasury management advisors when compiling this list) 

 

 

The Corporate Committee were responsible for formulating the Treasury Management Strategy and had decided at their meeting in January that they wanted further information on the non UK banks proposed for investment  in and a wider picture on the use being made of existing counterparty institutions.

 

 In response to the presentation the following information was provided to members of OSC:

 

  • The national line is that Councillors need to be more informed about the treasury management activities of the Council and there are specialist advisors to provide advice and guidance when recommendations are being compiled for members to consider. The Council’s advisors for the past 3 years have been Arlingclose.  As, part of obtaining this role, they had been able to demonstrate previous advice provided to their clients on the need to withdraw monies from the Icelandic banks in 2008.  Apart from monitoring credit reference agency ratings, there were also a number of other practical methods used to assess the credit worthiness of financial institutions. These were: Credit Default Swap Prices, Share Prices, Macro-economic indicators, Net debt as % of GDP for countries, Sovereign Support Mechanisms and Corporate Developments.

 

  • The current policy was to make good effective use of the Council’s cash balances through investment in Money Market accounts and borrowing from other local authorities as these offered a higher rate of return than savings accounts.

 

  • As yet there were not recommendations formulated on how the Council would take forward borrowing for housing stock in the future. Although, the Council were to have £232m of HRA debt written off, in return it was anticipated that the Council and other local authorities my not get future subsidy for housing.

 

 

  • Understanding on the Corporate Committee’s position to withhold lending to non UK counterparty institutions was sought and comparisons between the Council’s and other local authority treasury management activities.  It was noted that not all local authorities had the same strategy for lending and borrowing and there were too many different examples to make a comparison. The Corporate Committee had asked officers to withhold investments in non UK banks until March so that they could consider a report on the banks and money markets accounts used in the last 12 months. This was to enable them to get a better picture of the  ...  view the full minutes text for item 93