Decision details

The Executive considered report 21/10 of the Head of Finance on treasury management performance in 2009/10.  The report highlighted the performance of cash invested by the in-house team and that managed by Investec, the council’s investment manager.  Performance was also analysed by Butlers, the council’s investment adviser.  The in-house team achieved a return of 1.07 per cent, while Investec achieved 1.31 per cent.  At 31 March 2010, the fund balances for the in-house team and investment manager were £0.59M and £15.3M respectively.  Councillors noted that a report on return on property investments would follow in September. 

The Audit and Governance Committee believed that the report for 2009/10 should reflect the loss of investment in the Icelandic bank, Landsbanki.  The Head of Finance produced a briefing note for the Executive showing the impact of this.  Councillors noted that in 2008/09 the in-house performance dropped from 4.84 per cent to a 4.44 per cent return from the Landsbanki loss, whereas performance in 2009/10 was unaffected.  The council expected to receive most of its investment back with interest, but this could take until 2018.  Since the loss of the Landsbanki investment, the in-house team’s lending criteria were more cautious. 

Butlers concluded that the return on investment in 2009/10 was lower than expected due to low interest rates.  However, Butlers recommended no changes to the council’s approach as this allowed a balance of investments of top-quality and good liquidity.  The Executive recognised that it would be difficult for the council to achieve the expected return for 2010/11 if interest rates did not rise as market analysts had predicted. 

RESOLVED

(a)       To note the return on cash invested during 2009/10 and the balances at 31 March 2010, together with the briefing note updating the report following the Audit and Governance Committee meeting; and

(b)       To note the prospects for the return on cash investments in 2010/11.