Haringey outsources treasury to GLA
0London Borough of Haringey is set to outsource its treasury management to the Greater London Authority, with a second London council in discussions to join it.
Haringey has agreed the deal in an attempt to diversify its investments and increase investment returns while benefitting from the GLA’s larger treasury management team.
It joins four other external GLA clients – London Fire & Emergency Planning Authority, London Legacy Development Corporation, Mayor’s Office for Policing and Crime and London Pensions Fund Authority.
Luke Webster, treasury manager at the GLA, told Room151: “Our experience of the shared service arrangements to date has been extremely positive.
“Pooling investment balances has unlocked new opportunities for diversification and led to greater cash flow stability, which in turn has enabled us to deliver improved yields without compromising liquidity.
“Pooling human and systems resources has also enabled us to build greater resilience and specialist expertise, greatly enhancing the team’s contribution to strategic capital finance and risk management.
“We believe a measured increase in the number of participating authorities, subject to capacity, will deliver further benefits while allowing the GLA to provide practical support to the financing of local regeneration or housing projects.”
A Haringey council report earlier this month outlining the new arrangements said that the limited resources in the council devoted to treasury management created “key person risk”.
It said: “This is an area of work which requires high levels of financial expertise in a specific area of finance and the skills are hard to find in a local government market where salaries are capped.”
The GLA’s pooled investment fund currently has more than £2bn under management, and Haringey said: “The larger and more stable cash balances with the syndicate enables the fund to utilise a greater range of counterparties and invest over longer maturities. The average return earned in 2015-16 of 0.65% exceeds Haringey’s return of 0.46%.”
In addition, the council said that it could benefit from the GLA’s use of alternative sources to the Public Loan Works Board, including bond issuance, European Investment Bank loans and private transactions with insurers.
Haringey says the ongoing costs of joining the pool will be similar to current staffing and related expenditure.
Under the arrangements, the GLA will prepare Haringey’s treasury management strategy (TMS) in consultation with its chief finance officer, before being approved by council committees.
The GLA will also maintain Haringey’s treasury management practice statements which explain the procedures in place to manage treasury risk.
Day-to-day investing of cash balances will be undertaken through a pooled fund used by all the GLA’s clients.
The syndicate’s investment policy for 2016-17 is being prepared, and Haringey’s said its TMS may need to be revised so that it is consistent.
It is understood that another London borough is also in discussion with the GLA with a view to joining the pool.
Photo (cropped): David Jones, Flickr.
