Bonds agency to target short-term LA loans with web platform

The Municipal Bonds Agency is understood to be exploring plans to create an online platform to execute inter-authority lending deals.

Last week, a press release revealed that the agency, which is yet to launch its first bond, had appointed Irish outfit EBS Treasury to supply an electronic direct trading solution.

When contacted by Room151, the agency said that no deal has yet been signed and that the information had been released incorrectly. However, the agency has already announced its intention to move into the inter-authority lending sector, and the mooted deal seems to signal that the agency is set to challenge the traditional voice brokers which dominate the sector

Aidan Brady, chief executive of the agency, is quoted in press reports saying: “To date, UK local authorities have relied on manual processes for borrowing and lending cash between them.

“While this has worked for a long time, the move to an electronic solution will improve access to capital and have a meaningful impact on the efficiency of the process for their treasury teams.”

Brady was quoted as saying that the agency was planning to extend the service to other products such as money market funds, term deposits, certificates of deposits and other commercial paper products.

Any new platform launched by the agency would go head to head with a new portal soon to be launched by broker King & Shaxson, which already has 240 local authority clients.

This solution will allow authorities to express their interest in borrowing or lending online, and also submit deals online. Deals will be closed with an email confirmation sent to both lender and borrower.

But Alan Simkins, local authority dealer at King and Shaxson, said that its intention was to enhance, rather than replace its existing relationships with customers.

He said: “Customers can deal solely on the portal if they wish, however we intend to maintain the personal touch and understanding of what the client is looking for, so we can inform them of what factors are driving the market.

“Some online facilities run the risk of becoming too clinical and losing the personal touch, our ambition is to gain a closer relationship with our clients, not to distance them.”

Jackie Shute, director at Public Sector Live, which provides its own online treasury management solution, said: “The broker-LA relationship has provided an established and essential role for decades and, whilst it may be challenging for some firms to adapt to modern ways of working, the ability for treasurers to interact with human beings as part of the deal negotiation process can sometimes be essential.

“Attempts to replace any human interaction outright may not necessarily provide LAs with the optimum solution.  There is a risk that, rather than alleviating any dealing burden experienced by authorities, this new platform may indeed add to it.”