Treasury Management Policy and Strategy 2014/15 (Agenda item 11)
Report by the Assistant Director of Finance.
The Assistant Director of Finance presented the report which outlined the Council’s Prudential Indicators for 2014-15 to 2016-17 and set out the expected treasury operations for this period. It was noted that approval for the Treasury Management Policy, Strategy and Prudential Indicators for 2014-15 and 2016-17 would be requested from Full Council and not the Audit Committee.
The Council was required to receive and approve, as a minimum, three main reports each year incorporating a variety of policies, estimates and actuals. The first and most important was the report being considered, the prudential and treasury indicators and treasury strategy.
The Treasury Management Strategy for 2014-15 covered two main areas - Capital issues and Treasury Management issues.
The Assistant Director of Finance highlighted the following main changes and key issues:
· No change to the MRP policy.
· No change to counterparty limits.
· The Council’s treasury advisory contract expired in November 2013 and had been re-tendered with a new contract awarded to Capita Asset Services which ends March 31st 2017.
· Due to the timing of writing this report, all information on the capital programme had been based on the budget being presented to Cabinet on 19 February 2014.
· Due to ongoing position of the Co-operative bank, contingency accounts have been set up to support banking business continuity in the event of any issues. Breckland Council had joined a joint procurement with other Norfolk authorities to retender for a new banker, with scope for a start date of our choice so that it did not conflict with other authorities in order to minimise the risk and enable a successful implementation for Breckland.
Referring to Breckland Council’s counter party list, Members were informed that the merits for using Handelsbanken had been considered and £5m had been placed with this Swedish bank.
A detailed update on the procurement of banking services was provided. Soft market testing had been carried out with banks to establish interest and the response had been good.
The Assistant Director of Finance was pleased to announce that the sale of the Landesbanki claims had gone ahead. The sale means that Breckland had recovered 97% of the amounts that had been originally deposited with LBI in 2006. It was noted; however, that this money had already been factored into the balance sheet but now had been turned into ‘real cash’. £1.7m/84% had been recovered from the Glitner bank; however, £80m Krona was still being held in an escrow account, although there was no rush to repatriate this money as it was currently earning 4% interest. Distributions for Kaupthing, Singer and Friedlander were continuing and £3.4m out of £4m had already been received which had been greater than originally expected. In response to a question from the Vice-Chairman, the Assistant Director of Finance explained that the Council had responsibility for the exchange rate risk 8in relation to the escrow account. He pointed out that the Icelandic Krona was currently performing well against sterling.
In relation to the Council’s Treasury Management Advisors, Members were informed that Capita Asset Services had been re-appointed – a small saving on the contract had been made plus a few extras would be provided.
Mr Ludlow was pleased to see the acronyms listed at the end of the report but had not found the meaning of HRA. He referred to page 148 of the report where it stated Non-HRA and also asked the meaning of the figures in brackets to non-brackets. Members were informed that HRA stood for Housing Revenue Account and the latter related to the accounting treatment of the PFI scheme.
Mr Ludlow referred to page 155 of the report in relation to the different bank rates. Members were informed that the returns were anticipated to increase sooner and this had been reflected in 2016-17 and 2017-18.
Mr Ludlow also referred to page 169 of the report and asked why the Council had moved from £5m last year to £6m this year. The Assistant Director of Finance said that he would have to report back on this matter.
Councillor Cowen asked what the Council classed as the ‘best deal’. Members were informed that the ‘best deal’ would be a secure bank that offered good service and good quality at a good price. Councillor Jolly said that in anticipation of the Co-op problems adequate steps had been taken and another account had been set up with a different bank. She asked if it would be prudent in keeping a second bank as a contingency. The Chairman said that it varied from authority to authority and he was unsure if it would be practical due to the additional costs involved.
RECOMMEND to Council that:
1) the Treasury Management Strategy 2014-15 to 2016-17 as at Appendix A of the report be approved;
2) the Minimum Revenue Provision (MRP) statement contained within Appendix A of the report which sets out the Council’s policy on MRP be approved;
3) the Prudential Indicators and limits contained within Appendix A of the report be approved;
4) the Investment Strategy 2014-15 as at Appendix B of the report and the detailed criteria included in Appendix B1 of the report be approved; and
5) the Treasury Management Policy at Appendix B2 of the report be approved.
- TM Policy report 2014-15, item 11. PDF 74 KB
- Appendix A - T Mgt Strategy Prudential Indicators 2014-15, item 11. PDF 109 KB
- Appendix B - Investment Strategy 2014-15, item 11. PDF 82 KB
- Appendix B1 - Credit and Counterparty, item 11. PDF 51 KB
- Appendix B2 - TM Policy 2014-15, item 11. PDF 161 KB
- Appendix C - Economic Background, item 11. PDF 90 KB
- Appendix D - Approved countries, item 11. PDF 38 KB