Decision details

a) To increase the amount that can be retained in our Barclays accounts to £10m.
b) To increase the investment limit to 6m with all those counterparties meeting minimum credit rating requirements as per Council’s TMSS 2021-22.

The decision is made under Officer Delegations paragraph 7.3
a) Due to ongoing pandemic, interest rates are at historic low level.
Average return on investments that fall within Council’s risk appetite, ranges between 0.00 to 0.01% at present.
Currently we aim to retain a balance of no more than £5m in our Barclays accounts. This results in more deals being undertaken by the Treasury Team than we would if we had a higher limit.
Since TMS approval in February 2021 and the start of current financial year, the cash balance has increased consistently. The Council’s opening balance for the current financial year was £23.99 million and has increased to £67.20 million.
The daily average holding for the 2nd quarter 2021-22 is £57.413 million. Limited holding capacity is reducing the Council’s ability to efficiently manage funds and is significantly increasing transaction costs. This ultimately further reduces the net return (sometimes negative) on investments, which are already extremely low.
It is therefore proposed to temporarily increase holding limit with Barclays to £10m and all other counterparties to £6m until 31st March 2022.
Our Treasury Advisors, Link Asset Services are supportive of this approach.
There would be no loss of interest as per current rates. This change would improve our liquidity and diversify our investment / holding portfolio In terms of security our cash would still be held by a Financial Institution with a long term “A” credit rating and a short-term A-1 credit rating. These ratings are adequate.
In summary, this change would slightly reduce the security of our investments, improve liquidity, will not reduce returns and will reduce the costs of administration and bank charges.

Maintain the current approvals as outlined in the Treasury management Strategy 2021/22. Current limits are £5m for Barclays and £3m for all other counterparties.
This would require the continuing daily involvement of Treasury staff and other finance colleagues responsible for approving, releasing, allocating and monitoring the payments and daily treasury deals, requiring significant administrative resources and increased transaction costs.