Issue - meetings

To consider a report by the Lead Member for Finance and Assets (copy enclosed) providing details of the Council’s TM activities during 2012/2013 and provide background on investments and the annual TM Strategy Statement.

10.55am – 11.30am

The Chief Accountant introduced the report (previously circulated) and provided some background information on the Council’s treasury management function.

There were six sections to the report :-

            i           External economic environment

Ø      An update on any changes in the global economic conditions.

Ø      Financial markets being volatile affected the way investments were dealt with. The council’s treasury advisers had been monitoring economic and political developments and they were comfortable with extending the duration limits with the banks used.  The council’s current policy was to limit all investments to 7 days but the latest advice had been received after the report had been submitted to the Corporate Governance Committee.  The advice received had been considered and it was agreed to relax the criteria and extend the self imposed 7 day time limits.

Ø      The increased duration limits with the following UK banks were as follows:

v     Royal Bank of Scotland (RBS), National Westminster, Lloyds TSB and Bank of Scotland for a maximum period of six months.

v     Nationwide BS and Barclays for a maximum of twelve months.

ii          Investments

Ø      An update on who the council invest with and the current position.

Ø      It was decided that extending the duration limits would not yield substantial gains and the instant access call accounts would give greater flexibility to reduce the investment cash without the need for borrowing.  The investment term would be extended when it made financial sense to do so.

Ø      The up to date figure of investment was £27.7million which was divided out as follow:

£8million – Bank of Scotland, Instant Access Call Account

£4million – Lloyds, Instant Access Call Account

£6million – National Westminster, Instant Access Call Account

£4million – Royal Bank of Scotland, Instant Access Call Account

£5.7million – Barclays

and a further £2million held in the National Westminster Current Account

iii         TM strategy statement

Ø      A brief outline of what was included in advance of the report in January 2013.

Ø      The annual Treasury Management Strategy was produced which had to be approved by full council in February 2013.  The Corporate Governance Committee would review the strategy statement in January 2013 prior to full council.

Ø      The statement also outlined:

v     the council’s treasury position and what would be the investment strategy for the forthcoming financial year.  Also the borrowing strategy for the forthcoming year and listed the various sources of borrowing which were permitted to be used.

v     prudential indicators set boundaries within which the treasury management activity operated.  There were twelve indicators of which five were capital related and seven were treasury related.

v     capital related indicators which provided estimates of the capital expenditure over a three year period.  Estimates of the Capital Financing Requirement would also be provided.

v     Treasury management indicators showed the borrowing limits which set the maximum level of external borrowing over a three year period.  The indicators also set upper limits on exposure to fixed and variable interest rates to manage changes in interest rates.  Limits were set on the amount of debt maturing within various time periods, and the final indicator set an upper limit for sums invested over 364 days.

Ø      Procedures were in place regarding money laundering.  They were in place for verifying and recording the identity of counterparties and reporting suspicions.  The Head of Finance and Assets had been appointed as the Money Laundering Officer.

Ø      TM strategy for the future six months was to reduce the investment balances and to use temporary borrowing.

iv         Prudential Indicators

Ø      An explanation of the indicators including details of when they were set and a  ...  view the full minutes text for item 8