Dear Ms Rogers,

Information enquiry reference FOI-19-0634.

Thank you for your recent request for information, which we received on 3
May 2019.

The scheduled date for our response to your request for information is on
or before 4 June 2019.

Please do not hesitate to contact us should you have any queries in the
meantime.

Yours sincerely,

Access to Information Team

[1]ACC_Crest_for Aberdeen City Council | Access to Information Team |
mac email Customer Feedback |Customer

Marischal College |Business Hub 17,  3^rd Floor | Broad
Street | Aberdeen | AB10 1AQ

Dial: 01224 522166

[2]www.aberdeencity.gov.uk | Twitter: @AberdeenCC |
Facebook.com/AberdeenCC

IMPORTANT NOTICE: This e-mail (including any attachment to it) is
confidential, protected by copyright and may be privileged. The
information contained in it should be used for its intended purposes only.
If you receive this email in error, notify the sender by reply email,
delete the received email and do not make use of, disclose or copy it.
Whilst we take reasonable precautions to ensure that our emails are free
from viruses, we cannot be responsible for any viruses transmitted with
this email and recommend that you subject any incoming email to your own
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to regular monitoring.

References

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2. http://www.aberdeencity.gov.uk/

Dear Ms Rogers,

Thank you for your information request of 03 May 2019.  Aberdeen City
Council (ACC) has completed the necessary search for the information
requested. Our response is now detailed below.

A. Please provide a spreadsheet in .xls format containing the following
information for each of the LOBO loans you held in the 2015/16 financial
year (please use a row for each loan and a column for each parameter
indicated below):

1. Internal reference number

2. Principal

3. Initial counterparty

4. Date loan was signed

5. Drawdown date

6. Maturity date

7. Option period (number of months)

8. Start date for teaser rate (if applicable)

9. Teaser interest rate (if applicable - intended as the discount rate
sometimes offered before the initial rate)

10. Start date for initial rate

11. Initial interest rate (intended as the rate set for the term of the
loan until the first option is called)

12. First option date

13. Has the option been exercised?

14. Most recent date when option was exercised (if applicable)

15. Interest rate in 2015/16

16. Interest paid in 2015/16

17. Fair value in March 2016

18. Interest rate in 2018/19

19. Interest paid in 2018/19

20. Fair value in March 2019

21. Current counterparty

22. Name of treasury management advisor when the loan was taken out

23. Name of broker who arranged the loan

24. Fee paid to the broker for the loan

B. Please provide copies of:

1. The original LOBO loan contracts

2. The invoices for the broker fees

Please find enclosed document ref: FOI-19-0634 – Market Loans outstanding
which includes some of the required information.

ACC is unable to provide you with copies of the original loan contracts as
they are considered exempt from disclosure.

The publication of full details of the interest rates of the LOBO loans
would put the Council at a competitive disadvantage to other lenders who
could use this information to assist them to exercise their option to
increase interest rates.  This could result in higher interest rates and
increased costs to the Council, which would not be in the public interest.
Therefore, ACC is unable to provide you with information relating to the
initial interest rate, Stepped-up interest rate and step-up date where
applicable as it is exempt from disclosure. In order to comply with its
obligations under the terms of Section 16 of the FOISA, ACC hereby gives
notice that we are refusing your request under the terms of Section
33(1)(b) – Commercial Interests - of the FOISA.

In making this decision ACC considered the following points: The initial
interest rate and any stepped-up interest rates are exempt from release in
terms of Section 33(1)(b) of the Freedom of Information (Scotland) Act
2002 in that disclosure of the information would, or would be likely to,
prejudice substantially the commercial interests of any person including a
Scottish public authority. The agreements are on-going contracts and, as
such, disclosure of this information is likely to substantially prejudice
the interests of the Council.

Due to the tradable nature of these loans, it would not be in the
interests of ACC to make this information publicly available. The loans
are tradable by the lenders on the open market and contain an option for
the lender to increase the interest rate of the loan. The interest rates
are commercially sensitive due to the very nature of these loans.

Revealing the rates would put ACC in a position of unnecessary, additional
risk. The risk would stem from requests for increases to the rates of
these LOBO loans following the publication of this information. Financial
institutions would be able to identify how much interest rate a local
authority is willing to agree to and adjust their rates accordingly.  They
may also take the opportunity to ‘buy up’ the other loans and issue a
blanket request of increase. ACC’s position on these loans has always been
to repay if a request for rate increase was received. If this information
were to be released, this would clearly have significant financial risk to
ACC.

ACC also considers that the commercial interests of third parties, namely
the institutions providing the LOBO contracts would also be substantially
harmed by disclosure. Disclosure of interest rates and broker fees in
relation to certain loans may prejudice the future position of the
relevant organisations, particularly when negotiating loans with other
public sector authorities. ACC took out these loans in the years leading
up to the ‘credit crunch’, at a time when other interest rates were
relatively high. In all cases, these loans represent a considerable saving
over the comparable PWLB rates. A number of these loans were initiated
during a large debt restructuring exercise, at a substantial saving to the
Council, whereas the rest were offered at a substantial discount over the
government (PWLB) borrowing rates at that time, thus also at a substantial
saving to the Council.

Initially, these loans were approved by Head of Finance and reported to
full Council. They are regularly monitored by the Treasury Officer and
reported to full Council. ACC take a very serious approach to ensuring
that appropriate scrutiny mechanisms are fully implemented into all
aspects of financial management.

In conclusion, ACC considers that the necessity of protecting the
Council’s interests in retaining the agreement at its current state
outweighs the public interest in the requested information being
disclosed. ACC considers that disclosure would not contribute to either
ensuring effective oversight of the expenditure of public funds or
ensuring that the public obtain value for money for public funds. The
information already published in relation to these contracts, along with
the monitoring mechanisms in place, as detailed above, satisfies the
public interest in ensuring value for money and the mitigation of
foreseeable financial risk.

INFORMATION ABOUT THE HANDLING OF YOUR REQUEST

ACC handled your request for information in accordance with the provisions
of the Freedom of Information (Scotland) Act 2002. Please refer to the
attached PDF for more information about your rights under FOISA.

We hope this helps with your request.

Yours sincerely,

[1]ACC_Crest_for Salomeh Kheyri Rad | Access to Information Officer
mac email
Aberdeen City Council | Access to Information Team |
Customer Feedback |Customer

Marischal College | Business Hub 17 | 3^rd Floor | Broad
Street | Aberdeen | AB10 1AQ

Dial: 01224 522166

[2]www.aberdeencity.gov.uk | Twitter: @AberdeenCC |
Facebook.com/AberdeenCC

IMPORTANT NOTICE: This e-mail (including any attachment to it) is
confidential, protected by copyright and may be privileged. The
information contained in it should be used for its intended purposes only.
If you receive this email in error, notify the sender by reply email,
delete the received email and do not make use of, disclose or copy it.
Whilst we take reasonable precautions to ensure that our emails are free
from viruses, we cannot be responsible for any viruses transmitted with
this email and recommend that you subject any incoming email to your own
virus checking procedures. Unless related to Council business, the
opinions expressed in this email are those of the sender and they do not
necessarily constitute those of Aberdeen City Council. Unless we expressly
say otherwise in this email or its attachments, neither this email nor its
attachments create, form part of or vary any contractual or unilateral
obligation. Aberdeen City Council's incoming and outgoing email is subject
to regular monitoring.

References

Visible links
2. http://www.aberdeencity.gov.uk/