Agenda item
2011/12 Treasury Management Report to 30 November 2012.
- Meeting of Replaces Postponed meeting 11 December 2012, Audit Committee, Monday, 14th January, 2013 7.00 p.m., NEW (Item 5.6)
- View the background to item 5.6
To note the report.
Minutes:
The Service Head, Finance, Risk and Accountability presented the report circulated at agenda item 5.6. In noting the treasury activity for the period, he advised the Committee that the continuing adverse global financial situation meant that markets rewards were presently not favourable. Treasury management had been affected by the diminishing availability of safe investments and a fourth year of low interest rates.
In response to Members’ questions, the following information was provided.
The difference in the rate of same day borrowing between Royal Bank of Scotland (RBS) and Bank of Scotland (BoS) was due to the maturity dates of each of the investments and also that BoS presently had a better offer.
The Committee noted that the Council had significant exposure to RBS and BoS, was advised that this had come about because fewer secure investments were available. Since these organisations were under the Government’s guarantee scheme there was lower risk and assurance therefore the Authority had preferred these investments.
Members were advised that the Council was at liberty to opt to invest in Australian banks but this would depend on rate of return on offer and the date of investment.
The Council’s investment strategy aimed to avoid all non secure investments; therefore the council was restricted to a smaller circle of investors. Additionally there was now lending between local authorities indicating that local authorities have lesser trust in banks.
The Committee was advised that Cash Managers were achieving the targets set by the Council. Members would be informed in writing of the portfolio benchmark of the Councils cash management arrangement with Sector.
The Committee was informed that to gain access to the most favourable investments, the Council used Cash Managers who had expertise and a background in these areas of investments. The Committee requested that a Cash Manager be invited to speak at the next meeting and asked officers to undertake all necessary arrangements.
RESOLVED
That the report be noted
The Service Head, Finance, Risk and Accountability presented the report circulated at agenda item 5.6. In noting the treasury activity for the period, he advised the Committee that the continuing adverse global financial situation meant that markets rewards were presently not favourable. Treasury management had been affected by the diminishing availability of safe investments and a fourth year of low interest rates.
In response to Members’ questions, the following information was provided.
The difference in the rate of same day borrowing between Royal Bank of Scotland (RBS) and Bank of Scotland (BoS) was due to the maturity dates of each of the investments and also that BoS presently had a better offer.
The Committee noted that the Council had significant exposure to RBS and BoS, was advised that this had come about because fewer secure investments were available. Since these organisations were under the Government’s guarantee scheme there was lower risk and assurance therefore the Authority had preferred these investments.
Members were advised that the Council was at liberty to opt to invest in Australian banks but this would depend on rate of return on offer and the date of investment.
The Council’s investment strategy aimed to avoid all non secure investments; therefore the council was restricted to a smaller circle of investors. Additionally there was now lending between local authorities indicating that local authorities have lesser trust in banks.
The Committee was advised that Cash Managers were achieving the targets set by the Council. Members would be informed in writing of the portfolio benchmark of the Councils cash management arrangement with Sector.
The Committee was informed that to gain access to the most favourable investments, the Council used Cash Managers who had expertise and a background in these areas of investments. The Committee requested that a Cash Manager be invited to speak at the next meeting and asked officers to undertake all necessary arrangements.
RESOLVED
That the report be noted
Supporting documents: