93 TREASURY MANAGEMENT STRATEGY STATEMENT
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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 ...
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