Issue - meetings

This report updates the Committee on the Council’s treasury management activities and performance in the fourth quarter of 2011/12 and outlines the Council’s use of counterparties during 2011/12 at the request of the Committee at the January meeting.

The committee considered the quarterly update on the Council’s treasury management activities and performance in the fourth quarter of 2011/12 and the council’s use of counterparties during 2011/12. It was noted that there had been repayment of a proportion of the Council’s PWLB loans and of additional payments from Landsbanki and Glitnir banks.  The council had now recovered £18.3m from Icelandic banks; this was around 50% of the money originally invested.

Although there was some initial information enclosed on activities with counterparties over the last financial year, the position would continue to be monitored and reported to the Committee.

It was noted that many of the UK banks were on negative rating watch pending possible downgrade, therefore the only funds being placed with UK banks was on an instant access basis, so that funds can be withdrawn if the banks were to be downgraded. In addition the council is investing in Money Market Funds and the Debt Management Office. In response to this, the committee questioned if this action was sustainable or whether there was a review in mind? The interim CFO explained that the council were following a deliberate policy of keeping cash balances low and investing as little as possible because of the high borrowing costs currently being experienced.  By keeping balances in money market accounts and call accounts and through effective debt management the council had saved £3m and this sum would contribute to the financial planning for 2013/14.

The Interim Chief Financial Officer advised members that the council had already anticipated potential financial issues with Santander UK Bank and had removed them from the council’s lending list in December. The Interim CFO gave assurance to the committee that the council did not lend or invest money with this bank.

RESOLVED

That the Treasury Management activity undertaken during the fourth quarter of 2011/12 and the performance achieved be noted.