CCLA Investment Management Limited
Senator House, 85 Queen Victoria Street
London
EC4V 4ET
T: 020 7489 6155
E: Andrew.robinson@ccla.co.uk
CONFIDENTIAL
PSDF (12) M02
THE PUBLIC SECTOR DEPOSIT FUND (PSDF)
PSDF ADVISORY COMMITTEE MINUTES
MONDAY 14 MAY 2012
Present
Mr Stephen Jones
(In the Chair)
Mr Bob Atkins
Ms Jackie Fox
In attendance
(Secretary)
Mr Mark Davies
Mr Stuart Freeman
Mr Colin Peters
Mr Michael Quicke
Mr Andrew Robinson
1.
Apologies
NOTED that apologies for absence had been received from Mr Freer.
2.
Declaration of Interests
Mr Stephen Jones declared the following interests:
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indirectly, the LGA through the Local Authorities’ Mutual Investment Trust have a
15% shareholding in CCLA; and
the LGA currently have approximately £16 million invested in the PSDF.
NOTED that the remaining Member of the Committee, in attendance, confirmed that he
had no interests to declare at this time.
3.
Minutes
APPROVED the minutes of the meeting held on 16 January 2012 PSDF (12) M01.
4.
Matters Arising
Environmental, Social and Governance ESG Policy: in relation to Société Générale,
Mr Peters reported that CCLA Investment Management Limited (CCLA) together with
other investors had been successful in their discussions with Société Générale to improve
Société Générale’s governance arrangements.
5.
Market Overview
RECEIVED from Mr Freeman, the Market Overview PSDF (12) P09, as previously
circulated. Mr Freeman provided an update on the current market conditions. The
following were highlighted:
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Mr Jones questioned the impact on the PSDF of the latest developments in Europe.
Mr Freeman commented that the media reporting in respect of Greece was
becoming increasingly negative with significant speculation concerning Greece
exiting the Euro;
Mr Quicke commented that, in his opinion, Greece were unlikely to exit the Euro as
the mechanics of undertaking such an exercise would be extremely complicated;
Mr Robinson commented on the brinkmanship that was currently being
demonstrated. Mr Quicke commented that the (Long Term Refinancing Operation)
LTROs being provided by the European Central Bank) ECB were facilitating the
opportunity for banks to disinvest. Mr Freeman commented that the ECB currently
appear willing to inject as much liquidity into the economy as they deem necessary;
and
Mr Peters advised that there would be little value in devaluation for Greece as this
was predominantly only effective for countries that undertaken substantial exports.
NOTED the Market Overview in respect of the PSDF.
6.
Fund Summary
RECEIVED from Mr Peters, the Fund Summary PSDF (12) P10, as previously circulated.
The following were highlighted:
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the Fitch Portfolio Credit Factor (PCF) was currently 0.83, below the 1.00, which was
the maximum permitted PCF for the PSDF;
the PSDF’s Weighted Average Maturity (WAM) was below the maximum permitted
WAM of 60 days;
over the last four months the PSDF’s yield had been relative stable (0.65% to
0.77%) and predominantly at a comparable level to its competitor funds;
due to the PSDF’s low level of clients, CCLA were particularly mindful of the PSDF’s
liquidity and that the LGA currently holds 16% of the PSDF;
Mr Jones questioned whether CCLA had ascertained the current intentions of the
seed funders; as far as the LGA were concerned they would be willing to renew their
commitment to the PSDF;
Mr Peters commented that whilst this would be helpful, due to the constraints of the
PCF on the PSDF, renewed commitment would not make a material difference;
the activities of the clients in the PSDF were being closely monitored; as a result
investment patterns were starting to emerge which was assisting CCLA in the
management of the PSDF; and
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Mr Atkins commented that the Home Office’s decision to commission the
Association of Police Authorities to provide an interim representative body for
elected Police and Crime Commissioners between November 2012 and March 2013
as part of the transition to a new regime of policing governance would create a
series of new challenges for attracting investors to the PSDF.
NOTED the Fund Summary in respect of the PSDF.
7.
Approved Counterparty List and Rating Action
RECEIVED from Mr Freeman the Approved Counterparty List and Rating Action PSDF
(12) P11, as previously circulated. The following were highlighted:
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due to withdrawals on the last day of the month the 5% limit with Sumitomo Mitsui
Banking Corporation was temporarily exceeded. NOTED that by the following day
the PSDF was within its limits;
Mr Peters commented that the Approved Counterparty List was a Fitch requirement
rather than an FSA Regulatory requirement. In addition Fitch were primarily
concerned with CCLA demonstrating a responsible attitude rather than enforcing
absolute limits; and
in relation to Santander UK, Mr Peters commented that Santander UK were
operating under a separate UK banking licence and that they are unable to
repatriate any of their funds back to Spain without approval from the Bank of
England. On this basis the PSDF would continue to invest with Santander UK; both
Sector and Fitch supported this view.
NOTED the Approved Counterparty List and Rating Action.
8.
Current Investment Policy
RECEIVED from Mr Peters a verbal update in respect of the current Investment Policy.
Given the steepness of the yield curve the PSDF would continue to maintain, as long as
possible, its’ Weighted Average Maturity. Mr Jones concurred with this course of action.
9.
Business Development Report
RECEIVED from Mr Robinson, the Business Development Report, PSDF (12) P12, as
previously circulated. The following were highlighted:
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NOTED the PSDF accounts opened by sector and by region and the systematic
process that had been implemented to progress new leads;
Mr Davies advised that Parish and Town Councils often require an explanation of
how a Money Market Fund operates as they are unfamiliar with this type of
investment. The majority of Parish and Town Councils are earning between 20/30
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basis points on their investment as opposed to the 70 basis points currently being
offered by the PSDF. In addition several Parish and Town Council members are
familiar with the COIF Charity Funds which can often prove helpful in the promotion
of the PSDF;
the Advisory Committee discussed various aspects of business development in
relation to the PSDF fund;
Mr Robinson Mr Robinson commented that targeting the Trade Associations was
proving to be the most successful way of promotion the PSDF and engaging
investors; and
Mr Jones expressed his appreciation for all the work being undertaken by CCLA, not
only to promote the PSDF but also the education being provided in respect of
treasury management issues.
NOTED the Business Development Report in respect of the PSDF.
10. US Money Market Fund Regulation
NOTED the US Money Market Fund Regulation Report PSDF (12) P13, as previously
circulated.
11. Local Government Short Term Investments
RECEIVED from Mr Peters the Local Government Short Term Investments Report PSDF
(12) P11, as previously circulated. The following were noted in respect of the fourth
quarter to 2011:
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£4 billion has been invested in Money Market Funds a rise of 20%; this represented
over 12.6% of Local Government Short Term Investments; and
risk adverse behaviour had resulted in the Debt Management Office Deposit Facility
increasing by +129.5% from £1.15 billion to £2.045 billion.
NOTED the Local Government Short Term Investments Report.
12. Membership of the Advisory Group
The members and attendees discussed the current membership of the PSDF. AGREED
that Mr Jones would give consideration to suitable potential additional members. Action
Mr Jones.
13. Biographies of the PSDF Advisory Board Members
Messrs Atkins and Jones agreed to send their biographies to Mr Robinson. Ms Fox would
contact Mr Freer for his biography. Once all three have been received these would be
uploaded onto the website. Action Messrs Atkins, Jones and Robinson and Ms Fox.
14. Any Other Business
PSDF Annual Report and Accounts: Mr Peters circulated a draft of the PSDF Annual
Report and Accounts for comment. AGREED that Mrs Atkins and Jones would feedback
their comments to Mr Peters. Action Messrs Atkins and Jones.
15. Date of Next Meeting
NOTED that the next meeting of the Committee would be held on Monday 17 September
2012 at 9am.
There being no further business the meeting closed.
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Chairman