The Deputy Chief Executive/Director of Finance presented a review of Treasury Management policies, practices and activities during the third quarter of 2011/2012 and confirmed compliance with treasury limits and prudential indicators. The review had been prepared in accordance with the revised CIPFA Treasury Management Code and the revised Prudential Code. In response to comments from Members in relation to Icelandic Investment, the Director indicated that with regard to the £2m deposited with Heritable Bank, the latest creditor progress report issued by the Administrators Ernst and Young suggested that the return to creditors was now projected to be 90% by the end of 2012 and the final recovery could be higher. However, he commented that if Heritable Bank was unable to repay in full, a pre-emptive claim had been made against Landsbanki Islands HF for the difference. When the original investment had been made it was with Landsbanki Islands HF providing a guarantee to reimburse the Council should Heritable be unable to repay. Members also noted that Landsbanki Islands HF was also in Administration. In response to a question from a Member as to whether there was now greater confidence in European Banks, the Director indicated that at the present time there was not. Consequently, officers were now looking to North American banks for investment opportunities.

Resolved – That the report be noted.