• Home
  • About
  • Subscribe
  • LATIF
  • Conferences
  • Dashboard
  • Edit My Profile
  • Log In
  • Logout
  • Register
  • Edit this post

Room 151

  • 151 BRIEF

    What's New?

  • John Turnbull elected president of the SLT

    May 12, 2022

  • Pension pool identifies biodiversity as a priority

    May 11, 2022

  • TfL latest to face credit-rating downgrade by Moody’s

    May 10, 2022

  • Government proposes ‘fairer, more accurate’ business rates system

    May 10, 2022

  • Queen’s Speech confirms planning reforms

    May 10, 2022

  • 18,000 affordable houses lost through ‘permitted development’

    May 9, 2022

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews
  • Briefs

LA lending to money market funds and other authorities on the rise

0
  • by Editor
  • in Treasury
  • — 15 Mar, 2012

Last week we sent out our multiple choice Counterparty Trends Survey to Room151 readers and the following is a summary of the results.

The survey was designed to establish three broad sets of data: 1) who was taking part in the survey 2)  how much would they lend in 2012/13 compared to 2011/12 and 3) how would they lend to different types of counterparty, again comparing this financial year to last.

Of the 41 senior finance, resource and accounting officers who took part in the survey there was a fair spread across different types of councils with the majority coming from either unitaries or boroughs and cities being the least well represented. 42% said they would be lending over £100m in 2012/13 with a further 15% lending £50-£100m.

Lending across the board was clearly down on last year with 59% of respondents lending 0-25% less and only 19% of respondents saying they would be lending more money in total.

The individual types of counterparties we surveyed readers on were UK banks, UK building societies, money market funds, the DMO, other local authorities, non-UK banks (directly), UK Gov gilts and, finally, supra-nationals.

The question we put to participants about these the various borrowers was phrased as follows: As things stand, how do you think your lending to counterparty X will change in the financial year 2012/13? Do you think you’ll lend a) more, b) less or c) roughly the same, compared to 2011/12 or d) do you not lend to X at all?

It would seem entirely reasonable, given the overwhelming trend towards less lending in general, that all or most of these counterparty types would suffer to some extent. The picture was not so clear, however. 34% said they would be lending more to money market funds with another 32% saying they would lend roughly the same to the pooled funds. Only 3 of the 41 respondents said they would lend less to money market funds, signifying a trend perhaps towards further diversification of capital assets.

80% said they would either be lending the same (53%) or more (27%) to other local authorities with only 1 respondent reducing their lending to local authority peers. 61% said they would not be lending directly to non-UK banks while an eye-catching 27% said they would lending more to that group. It would be interesting to hear comments on which non-UK banks stand to be the beneficiaries of that increase.

Where then were the net losers? With lending down for the most part, borrowing could not be up for all the counterparties. Step forward UK banks and the Debt Management Office. The big loser of the survey was the DMO with 29% not lending to it at all and a further 39% lending less than last year. The picture was not quite as bad for UK banks but a chunky 29% said they would be lending less to UK banks this year compared to 19% opting to lend them more.

With only 41 completed surveys, and consequently less than 10% of UK local authority treasury functions represented, the results are far from scientific but nonetheless some fascinating results perhaps offer a suggestion of what trends could be emerging in the wider market for the coming financial year. Thanks to all those who took part.

Other Highlights of Lending Trends in 2012/13 (percentages have been rounded up or down to the nearest whole number, as above) 

1. 10% of respondents will be lending more to UK building societies while 39% will lend them nothing. 
2. 83% will lend nothing to supra-national institutions while 10% will lend more. 
3. 78% will lend nothing to UK Government gilts compared to 15% who will lend more. 
4. 17% will not be lending to other local authorities
5. 27%  will not be lending to money market funds
6. 10% will lend more to the DMO

Share

You may also like...

  • Room151 panel backs unitary councils and devolution 8th Feb, 2021
  • Liability benchmark ‘should not be mandatory’ 29th Apr, 2022
  • Waste authority to issue green bond through UKMBA 2nd Feb, 2022
  • Impact Awards: Finance teams are the heart of ‘better outcomes and resilient’ place settings 7th May, 2021

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 1 day ago

    ‘Urgent consultation’ issued in response to continuing audit delays: CIPFA and the Local Authority Scotland Accounts Advisory Committee (LASAAC) have announced another “urgent consultation” to consider proposals to address the latest issue that has led… dlvr.it/SQJ0kV pic.twitter.com/s6vw0bnGXO

    Room151 2 days ago

    Bags of capacity – now to housing delivery: HRAs have been freed up and councils are starting to invest, but some remain cautious, writes Steve Partridge. He suggests that a minimum of £10bn of additional borrowing could be[...] dlvr.it/SQDvxk pic.twitter.com/yZmoWzHv6U

    Room151 2 days ago

    Bags of capacity – now to housing delivery room151.co.uk/treasury/bags-…

    Room151 3 days ago

    To Michael Gove: a modest proposal: Conrad Hall has written an open letter to the levelling up secretary suggesting an unusual (and tongue-in-cheek) proposal to help councils predict next year’s government grant. Dear Secretary of State,[...] dlvr.it/SQ9GpX pic.twitter.com/mSX1xgeL8a

    Room151 3 days ago

    Queen’s Speech: an ambitious plan hampered by omissions: Richard Harbord examines the impact of the government’s legislative proposals on councils, and concludes that local authorities expect and need more from central government. However you view the… dlvr.it/SQ8hmP pic.twitter.com/BsnziyNPIO

    Room151 4 days ago

    Insights and inspiration from LGPS leaders past and present: Four current and former LGPS leaders have recently given powerful and insightful interviews as part of the Fiftyfaces podcast, which showcases inspiring investors and their stories. Hosted by… dlvr.it/SQ53lC pic.twitter.com/IRYMFPxdA2

    Room151 5 days ago

    Rate rise represents ‘fastest increase in borrowing costs in 25 years’: Partner Content: CCLA Investment Management’s Robert Evans analyses the rationale for the Bank of England’s latest rise in the Official Bank Rate and assesses the likely outcome of… dlvr.it/SQ33k3 pic.twitter.com/A81yiS1UgN

    Room151 5 days ago

    The Liability Benchmark, very much unloved at the recent Room151 treasury briefing, receives a much more positive assessment from Jackie Shute. There’s ‘no better tool for treasury portfolio management’, she says. #localgov #finance room151.co.uk/treasury/in-pr…

    Room151 5 days ago

    In praise of the Liability Benchmark: Jackie Shute responds to recent criticisms of the framework used to plan the future borrowing requirements of a local authority. I’m not suggesting that this debate will have the same[...] dlvr.it/SQ2cGf pic.twitter.com/4rqXTpHC9A

  • Categories

    • 151 News
    • Agent 151
    • Audit
    • Blogs
    • Business rates
    • Chris Buss
    • Cllr John Clancy
    • Council tax
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Education
    • Forum
    • Funding
    • Governance
    • Graham Liddell
    • Housing
    • Ian O'Donnell
    • Infrastructure
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • Levelling up
    • LGPS
    • Mark Finnegan
    • Net Zero
    • Private markets
    • Recent Posts
    • Regulation
    • Resources
    • Responsible investing
    • Richard Harbord
    • Risk management
    • Social care
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Transport
    • Treasury
    • Uncategorized
    • William Bourne
  • Archives

    • 2022
    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story Iceland’s Glitnir makes first repayment
  • Next story Gross or Net?

© Copyright 2022 Room 151. Typegrid Theme by WPBandit.

0 shares