TradeRisks breaks into treasury adviser market with Derby
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A new entrant has broken the three-year dominance of Capita Asset Services (CAS) and Arlingclose in the local authority treasury adviser market.
Derby City Council has signed a two-year contract with adviser TradeRisks, with the option of yearly increments up to five years.
CAS and Arlingclose have had the market sewn up between them since Arlingclose merged with Sterling Consultancy Services in 2013.
Martyn Marples, director of finance at Derby council, told Room151: “There is always nervousness when you go with a new supplier but we will know pretty soon if we are getting the service we expect.
“When you run a tender and ask people to bid, if they provide evidence they can deliver the services then you can’t interfere with the tender process.”
Bryony Harrap, associate director at TradeRisks, said: “We have been doing treasury management advice for housing associations since 2003 and now have more than 35 clients in that sector. We have experience of managing investments and debts.
“The local authority sector can be difficult to break into but as we already provide other financing and custody services for councils, and provide ongoing treasury management services for housing associations, extending our business in this way seemed like a logical move.”
TradeRisks replaces Arlingclose at Derby after it submitted a lower bid for the new contract.
Marples would not reveal the price of the tie-up, but said that it fell under the EU procurement threshold of £150,000 over the five-year period.
The contract will cover ongoing reviews of the council’s debt and investment position; ongoing reviews of policies, investment strategies and procedures; briefings on financial markets; monitoring the debt and investment portfolio; ad hoc services including training sessions; training sessions on new developments in treasury markets; plus benchmarking.
TradeRisks has already provided ad hoc services to Warrington Borough Council, notably arranging a £150m bond for the council, and also provides custody services to a number of authorities, but the Derby deal is its first contract providing treasury advice.
But Marples said he was not concerned about any potential conflict of interests from TradeRisks’ other investment activities.
He said: “Other treasury advisers will also strike deals for you and take fees on these deals. We won’t be pushed in a particular direction – we know what is happening out there.”
Harrap said: “The custody service we provide is unrelated to our treasury management services as we are not selling them assets or managing their investments as part of this service.
“Councils can easily access prices and details of the custody services to make a decision on what is best for them pricewise, so there is no conflict.”
On the debt side, she said: “In the post financial crisis environment, where insurers and pension funds are increasingly taking the role of banks, the optimum advice can only be derived through the debt arrangement process.”
Since 2013, only two players have serviced the treasury advisory needs of UK local authorities.
In 2011, the Competition Commission cleared the takeover of advisor Butlers by Sector Treasury Services. Two years later, Sector rebranded itself as Capita Asset Services.
The market consolidated further in 2013 after the Office of Fair Trading cleared the merger between treasury consultancy firms Arlingclose and Sterling Consultancy Services.
Photo (cropped) Matt Thorpe. Flickr.
