Issue - meetings

The Committee considered a report of the Director of Corporate Resources, the purpose of which was to seek the views of the Committee about recommended changes to the method by which the acceptability of counterparties to whom surplus balances could be lent was decided. A copy of the report marked ‘Agenda Item 1’ is filed with these minutes.

The Chairman welcomed Dan Wilson from Capita to the meeting for this item.

It was noted that if a counterparty was declared bankrupt, the County Council would lose its investment with the exception of what could be recovered through legal processes. The Committee was advised that credit rating agencies had learnt lessons from the financial crisis in 2008/09 and were now more effective and quicker to downgrade banks. Capita’s decisions regarding counterparties were based on an analysis and comparison of the level of risk and rate of return, as well as looking at the market’s views on risk.

Members acknowledged that the current list of counterparties was too small. Although there was risk involved in widening the list, the Committee had received assurances that appropriate arrangements were in place to provide mitigation. The Committee wished to see the list of counterparties being closely monitored to ensure that the Council was not exposed to unnecessary risk.

Some members suggested that, when considering the change to the list of counterparties, the Cabinet should also give consideration to developing an ethical banking policy, for example to ensure that the County Council was not investing in oppressive regimes. It was acknowledged that there would be major practical difficulties involved in defining ethical limitations.   

RESOLVED:

(a)  That the content of the report be noted;

(b)  That the comments now made be referred to the Cabinet for consideration.