Agenda, decisions and minutes

(a)        This meeting is to be webcast;

(b)            Members are reminded of the need to activate their microphones before speaking; and

(c)        the Chairman will read the following announcement:

“I would like to remind everyone present that this meeting will be broadcast live to the Internet and will be capable of subsequent repeated viewing, with copies of the recording being made available for those that request it.

By being present at this meeting, it is likely that the recording cameras will capture your image and this will result in your image becoming part of the broadcast.

You should be aware that this may infringe your human and data protection rights. If you have any concerns then please speak to the Webcasting Officer.

Please could I also remind Members to activate their microphones before speaking.”

The Chairman made a short address to remind all present that the meeting would be broadcast on the Internet, and that the Council had adopted a protocol for the webcasting of its meetings.

(Assistant to the Chief Executive) To declare interests in any item on this agenda.

There were no declarations of interest pursuant to the Council’s Code of Member Conduct.

Section 100B(4)(b) of the Local Government Act 1972, together with paragraphs (6) and (24) of the Council Procedure Rules contained in the Constitution require that the permission of the Chairman be obtained, after prior notice to the Chief Executive, before urgent business not specified in the agenda (including a supplementary agenda of which the statutory period of notice has been given) may be transacted.

In accordance with Operational Standing Order 6 (non-executive bodies), any item raised by a non-member shall require the support of a member of the Committee concerned and the Chairman of that Committee. Two weeks’ notice of non-urgent items is required.

It was noted that there was no other urgent business for consideration by the Cabinet.

(Finance & Performance Management Portfolio Holder) To consider the attached report (C-049-2008/09).

(1)        That the report on the Council’s investments be noted and submitted to the Council for wider consideration;

(2)        That, in order to examine ways of enhancing controls in the current environment, the Treasury Management audit be brought forward in the Internal Audit Business Plan; and

(3)        That a full list of the Council’s investments and corresponding maturity dates be placed in the Members’ Bulletin.

The Finance & Performance Management Portfolio Holder presented a report regarding the Council’s investments in light of the recent problems with Icelandic banks. The Portfolio Holder reported that financial markets were experiencing unprecedented turbulence. Global stock markets had suffered substantial falls with numerous banks and insurance companies rescued by their governments or put into administration. Given the current state of markets, it was felt appropriate to update the Cabinet on the Council’s Treasury Management Strategy, investment position and the risks currently being faced.

At the invitation of the Portfolio Holder, the Director of Finance & ICT reported that the Treasury Management Strategy currently allowed up to £12million to be invested with banks that had a short-term rating of F1+ and a long-term rating of AA-, or a maximum of £5million with banks rated F1 and A respectively. The credit ratings were provided by three agencies (Fitch, Moody’s and Standard & Poor) and consolidated into a list of approved counterparties by the Council’s advisers, Butlers. In February 2005, the counterparty list was expanded to include building societies and foreign banks, in line with Government Guidance. Icelandic banks were included as their credit ratings were good with competitive rates of interest. The Council placed a number of loans with them, all of which were repaid on their due dates without problem.

The Director of Finance & ICT stated that concerns were raised informally regarding Icelandic banks by Members in November 2007 and subsequently no new loans were entered into. The status of Heritable Bank was reviewed but, as it was registered and regulated in the United Kingdom, it had remained on the counterparty list. Loans totalling £2.5million were made to Heritable Bank during September 2008, with repayment dates of May and June 2009. On 7 October 2008, Heritable Bank was placed in administration due to difficulties experienced by its Icelandic parent company, which Ernst & Young had been appointed to manage. Some favourable comments had been made about the asset base of Heritable Bank, supported by the administrators, however it was likely that the situation would not be resolved until mid-November. The Council had been designated an ordinary creditor with Heritable Bank and would not get privileged status; the Council’s claim had already been instigated with the administrators.

The Director of Finance & ICT reassured the Cabinet that Butlers were providing regular updates to the Council’s approved counterparty list as financial institutions had their credit ratings amended, and that the Council would continue to adhere strictly to its Treasury Management policies. New loans would only be entered into with those institutions meeting the Council’s requirements. The Treasury Management function was audited annually by Internal Audit, however to assist with the development of additional controls, the Chief Internal Auditor had been requested to bring the audit forward within the Internal Audit Business Plan for 2008/09.

In respect of the Council’s other investments, the Director of Finance & ICT advised the Cabinet that the money invested with Northern Rock had been returned on the due date, whilst a loan of £1.5million  ...  view the full minutes text for item 80.