Scottish Treasury Management Forum
CIPFA Scottish Treasury Management Forum
Current Investment Practices
And
Investment Framework
Scottish Treasury Management Forum
Investments - Overview
The 2009 remit was to:
“review the current investment management practices and bring
forward proposals which would form a framework for authorities to
work within which will ensure a consistency of approach based on
a sound risk assessment in relation to investment opportunities”
Scottish Treasury Management Forum
2009 Summary
•
Authorities have taken a range of pro-active measures to manage
and mitigate the investments risks over the last two years
•
Authorities have different requirements and therefore different
appetites for risk
•
In light of their risk appetite, authorities should continue to consider
how they manage their counterparty risk e.g. from the perspective
of number, level of commitment, quality etc
•
The lessons of BCCI should not be lost on authorities
•
Where appropriate, authorities should consider other investment
opportunities
Scottish Treasury Management Forum
2009 - Other Investment Options
•
Premature Debt Redemption
•
Money Market Funds?
•
Collective Local Authority Investment Product?
•
Government Backed Certificates of Deposit
•
Treasury Bills
•
Other Products?
Scottish Treasury Management Forum
Liquidity
Yield
Scottish Treasury Management Forum
Security - 2009 Actions Already Taken
•
Significant premature repayment of PWLB debt to de-risk
investment portfolio
•
A reduction in the periods which deposits are placed for
•
A tightening of credit criteria used to produce the counterparty
list
•
Investment with counterparties which would be most likely to
receive UK Government and Central Bank support
•
Greater use of instant access accounts
•
Inclusion of additional more secure counterparties such as the
DMO
Scottish Treasury Management Forum
Refinancing Risk
v.
Counterparty Risk
Scottish Treasury Management Forum
31 March 2011 Debt
LGov Fin Stats Total Debt
£11,490,801 (‘000)
TMF Gross Debt
£10,507,658 (‘000)
Scottish Treasury Management Forum
Whole of Scotland LAs – PWLB Maturity Profile
400
£(m)
350
300
250
200
150
100
50
PWLB Maturity Profile (31/03/2011)
2061
2059
2057
2055
2053
2051
2049
2047
2045
2043
2041
2039
2037
2035
2033
2031
2029
2027
2025
2023
2021
2019
2017
2015
2013
2011
0
Scottish Treasury Management Forum
Whole of Scotland LAs – PWLB Rates
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
1 Year
5 Years
10 Years
15 Years
25 Years
50 Years
Bank Rate
0.0
Apr08
Jul08
Oct08
Jan09
Apr09
Jul09
Oct09
Jan10
Apr10
Jul10
Oct10
Jan11
Apr11
PWLB Maturity Rates April 2008 to date
Jul11
Oct11
Jan12
Scottish Treasury Management Forum
Security - Counterparty Concentration - 2009
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
£0-£10m
£10m-£20m
£20m-£30m
£30m-£40m
Percentage Of Deposits With Single Counterparty
£40m+
Scottish Treasury Management Forum
Security - Counterparty Concentration - 2011
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
£0-£5m £5m -£10m
£10m -£20m
£20m -£30m
£30m -£40m
£40m +
P e rc e ntage O f D e po sits W ith S ingle C ounte rparty
Scottish Treasury Management Forum
Security / Yield - Deposit Rates
1.8
(%)
1.6
1.4
AIB
1.2
Principality BS
1
Abbey
Clydesdale
0.8
Royal Bank
0.6
Barclays
Leeds BS
0.4
HSBC
0.2
DMO
0
1
2
3
4
5
6
7
8
9
10
11
12
Fixed Term Deposit Rates - 29 Oct 2009
Scottish Treasury Management Forum
Investments - Scotland-wide Summary
+ £748 million
2009
2011
£1,003,225,985
£1,751,095,700
Scottish Treasury Management Forum
Investments - Scotland-wide Summary
2009
2011
DMO
£81,530,000
8.13%
£40,340,000
2.30%
Local Authorities
£93,070,000
9.28%
£224,250,000
12.81%
Government Guaranteed
£40,000,000
3.99%
£38,496,633
2.20%
£0
0.00%
£4,714,206
0.27%
£214,600,000
21.39%
£307,800,838
17.58%
European Investment Bank
Scottish Treasury Management Forum
Investments - Scotland-wide Summary
0.8
Yield (%)
0.7
0.6
6 month
3 month
0.5
1 month
0.4
0.3
0.2
0.1
0
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Treasury Bill Tender Results (April to December 2011)
Nov-11
Dec-11
Scottish Treasury Management Forum
Investments - Scotland-wide Summary
2009
Money Market Funds
2011
£14,968,021
1.49%
£165,133,082
9.43%
Bonds Fund
£0
0.00%
£20,000,000
1.14%
Other
£0
0.00%
£1,424,979
0.08%
£14,968,021
1.49%
£186,558,061
10.65%
Scottish Treasury Management Forum
Investments - Scotland-wide Summary
2009
2011
Nationwide Building Society
£68,500,000
6.83%
£36,400,000
2.08%
Other Building Societies
£31,900,000
3.18%
£0
0.00%
£100,400,000
10.01%
£36,400,000
2.08%
Scottish Treasury Management Forum
Investments - Scotland-wide Summary
2009
2011
Lloyds TSB Bank
£20,000,000
1.99%
£5,500,000
0.31%
HSBC Bank plc
£22,300,000
2.22%
£20,000,000
1.14%
Barclays Bank
£73,500,000
7.33%
£93,557,341
5.34%
Other Banks
£59,000,000
5.88%
£60,000,002
3.43%
£174,800,000.00
17.42%
£179,057,343
10.23%
Scottish Treasury Management Forum
Investments - Scotland-wide Summary
2009
Bank of Scotland Plc
2011
£228,108,561
22.74%
£469,965,063
26.84%
£40,316,875
4.02%
£315,763,671
18.03%
Santander
£102,888,474
10.26%
£154,363,973
8.82%
Clydesdale
£127,144,054
12.67%
£101,186,750
5.78%
£498,457,963.68
49.69%
£1,041,279,457
59.46%
Royal Bank of Scotland
Scottish Treasury Management Forum
Security / Yield - Deposit Rates
3
BoS
Santander UK
Principality BS
Clydesdale
Barclays
RBoS
Co-op
Leeds BS
Nationwide BS
Rabobank
HSBC
DMO
2.5
2
1.5
1
0.5
0
0
1
2
3
4
5
6
7
8
9
Fixed Term Deposit Rates - February 2012
10
11
12