Memorandum by Bournemouth Borough Council
(LAI 14)
I wish to submit the following comments to your
inquiry:
— This Authority has never invested in
an Icelandic bank and indeed they have never been on our counterparty
list.
— The amount this Authority has invested
is approximately £80 million and are budgeting on a return
of some £4.8 million for 2008-09. This is a significant figure
in our budget and any reduction in the amount because of a restriction
in our investment strategy would have a major impact on our services
or council tax charge.
— We work within a Treasury Management
Strategy approved by Council each year who approve the list of
counterparties that we are allowed to invest with. In addition
to this annual review at a high level, the Treasury Management
Team constantly monitor the market and the ratings of the counterparties
and react accordingly.
— This resulted in Northern Rock, Bradford
and Bingley and Alliance and Leicester being removed from our
counterparty list in advance of their difficulties.
— Any restrictions in our counterparty
list would also have an impact on those institutions. Any distortion
of the market, through regulation, could affect these institutions
adversely and cause problems in the money market.
— The significance of the amounts invested
by Local Authorities in the money markets should not be underestimated.
— The bringing in of any regulations would
be against the recent trend of deregulation that has been put
in place eg Prudential Borrowing.
December 2008
|
