LOBO loans

The request was successful.

Jonathan Stevenson

Dear Leeds City Council,

1. How many Lender Option Borrower Option (LOBOs) contracts do you
have on your books?
2. When were they signed? and by whom?
3. With which financial institutions were they taken out?

4. Who advised the council to enter the LOBO(s)
5. Since each Contract has been signed, has the lender exercised
their option and changed the interest rate?
6. If so, please specify the dates of the interest rate changes and
the revised interest rates.
7. Please provide a copy of the original, signed LOBO agreement.

Yours faithfully,

Jonathan Stevenson

CCDPFOI, Leeds City Council

Dear Jonathan Stevenson

 

Freedom of Information Request 13821: LOBO loans

 

I am writing regarding your request which I received on 4 March, 2015. . I
shall address each of your questions in turn.

 

 1. How many Lender Option Borrower Option (LOBOs) contracts do you have
on your books?

The Council has 46 such contracts in place.

 

 2. When were they signed? and by whom?

Each individual contract was signed once agreement had been reached with
the Counterparty for that particular contract. They were signed by the
appropriate delegated officer under the Council’s scheme of delegation,
the Chief Officer – Corporate Financial Management. 

 

 3. With which financial institutions were they taken out?

This is commercially sensitive information as these loans are still in
issue.

 

 4. Who advised the council to enter the LOBO(s) 5. Since each Contract
has been signed, has the lender exercised their option and changed the
interest rate?

The Council reached its own decision about the timing, rate and quantum
for each agreement after considering all the factors. This process
included consultation with the Council’s external Teasury Managerment
advisors Capita (formerly Sector) but the final decision was the sole
responsibility of the Council.

 

5.         If so, please specify the dates of the interest rate changes
and the revised interest rates.

None of the LOBO loans that the Council has currently outstanding has had
interest rate changes notified and accepted.

 

6.         Please provide a copy of the original, signed LOBO agreement.

 

 

I am unable to provide you with copies of these documents as some of the
contents are commercially sensitive under S43 of the Freedom of
Information Act..

 

Please note that the Council’s latest Treasury Management strategy was
approved by the February 2015 meeting of Full Council. A copy of the
strategy is included in the agenda pack for that meeting, which is
published online in the Councillors and Democracy section of the Your
Council strand of the Council's website, [1]www.leeds.gov.uk.

I trust my reply serves to assist in your enquiry.  If you have any
queries about this letter, please feel free to contact me.

 

If you are unhappy with the service you have received in relation to your
request and wish to make a complaint or request a review of our decision,
you should write to:

 

Freepost RLZR-ELTX-RUEH

Leeds City Council

PO Box 657

LS1 9BS 

 

If you are not satisfied with the outcome of your complaint, you may apply
directly to the Information Commissioner’s Office (ICO) under Section 50
of the Freedom of Information Act for a decision.  Generally the ICO
cannot make a decision unless you have exhausted the complaints procedure
provided by Leeds City Council. 

 

The Information Commissioner can be contacted at: The Information
Commissioner’s Office Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9
5AF.

 

Yours sincerely

 

 

 

Saleem Aziz

Support & Development Officer

t: 0113 39 52734

e: cc[2][Leeds City Council request email]

e: cc[3][email address]

w: [4]www.leeds.gov.uk

 

Corporate Information Governance, Leeds City Council, Civic Hall,
Calverley Street, Leeds, LS1 1UR

 

“Information is everyone’s business and responsibility.”

 

 

 

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Jonathan Stevenson

Dear Leeds City Council,

Please pass this on to the person who conducts Freedom of Information reviews.

I am writing to request an internal review of Leeds City Council's handling of my FOI request 'LOBO loans'.

Your response refuses to provide details of the financial institutions with whom your LOBO loans were taken out, and to release copies of the full contracts, on the basis of a Section 43(2) exemption.

Firstly, please confirm any named counterparties the council has consulted (including banks, advisors, and brokers) prior to citing the Section 43(2). In Derry City Council vs Information Commissioner (EA/2006/0014) it was established that to engage Section 43(2) authorities should consult any parties whose interests might be affected if the information were disclosed. Failure to obtain the views of affected third parties can invalidate the authority's reliance on the exemption.

Secondly, MoJ guidance on Section 43(2) exemptions (https://www.justice.gov.uk/downloads/inf...) states that the public interest test applies and that examples of this include ensuring there is "transparency in the accountability of public funds" and that "public money is being used effectively and that departments are getting value for money when purchasing goods and services". I believe there is a clear public interest in being able to effectively scrutinise the council’s purchasing of financial services, including by comparing LOBO loans to the cost of borrowing from the Public Works Loan Board to assess value for money. The complexity of LOBO loans means that effective scrutiny is only possible by looking at the details of the loan contract.

Guidance issued by the Information Commissioner (https://ico.org.uk/media/for-organisatio...) also states that "Where a public authority is satisfied that the information requested is a trade secret or that its release would prejudice someone’s commercial interests, it can only refuse to provide the information if it is satisfied that the public interest in withholding the information outweighs the public interest in disclosing it. The bias is in favour of disclosure and there will be occasions where information is released even though it is a trade secret or is likely to prejudice someone’s commercial interest." Furthermore, in Dept of Health vs Information Commissioner (EA/2008/0018) it was established that Section 43(2) should not be used to result in the blanket exemption of whole contracts, rather they should be assessed section by section and the rest disclosed.

Please note that numerous local authorities - including Kent, Greenwich and Haringey - have fully responded to similar FoI requests, providing digital copies of the LOBO loan contracts. Lenders named in these contracts have included Barclays, RBS, Dexia and DEPFA.

A full history of my FOI request and all correspondence is available on the Internet at this address: https://www.whatdotheyknow.com/request/l...

Yours faithfully,

Jonathan Stevenson

CCDPFOI, Leeds City Council

Dear Jonathan Stevenson

 

Freedom of Information Review (Ref: 13821) LOBO loans

 

I refer to the above and your request for an internal review which has
been passed to the relevant section for investigation.  We will deal with
your complaint under stage two of Leeds City Council’s Compliments and
Complaints Policy.

 

The Council continues to consult with its LOBO counterparties to see
whether further information can be disclosed under the FOI request.  I
note your comments but at this stage  further information cannot be
released until all the lobo counterparties have responded to our requests,
on the grounds of commercial sensitivity as previously cited.  Whilst we
gather these responses, perhaps a little further background information
would help.  The Council’s Lobos are not complex in their nature.  In
general all of our 46 loans have a maturity length of  35-70 years.  Each
loan has a fixed interest rate throughout the length of the loan.  This
rate does not change unless the Lobo counterparty exercises its option to
change the rate at predetermined points.  If the option was exercised by
the counterparty and did increase the loan interest rate, then council has
the option to either repay, without penalty, the principal loan
outstanding, or continue to pay the new rate until the next option date.
Each loan has a non-call option period of up to 10 years.  Subsequently,
the option dates are set at every 3 years for some loans ,5 year for some
loans and  6 years for the remaining loans.  The original basis of the
decision to enter into a LOBO was taken that it offered better value to
comparable PWLB and this rationale will still be applied if any Lobo
options are exercised by the counterparties, in the future.

 

I anticipate getting further responses by the end of this week and then
being in a position provide a full response on the review that has been
conducted the week after.  I appreciate that other Councils have provided
the information that you have requested, however the Council has a duty to
ensure that releasing any further contractual information does not result
in expensive litigation.

 

If you have any further issues or concerns that might impact on the review
please contact myself on 0113 39 52734.

 

Yours sincerely,

 

 

Saleem Aziz

Information Governance Officer

t: 0113 39 52734

e: [1]cc[Leeds City Council request email]

e: [2][email address]

w: [3]www.leeds.gov.uk

 

Corporate Information Governance, Leeds City Council, Civic Hall,
Calverley Street, Leeds, LS1 1UR

 

“Information is everyone’s business and responsibility.”

 

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References

Visible links
1. mailto:cc[Leeds City Council request email]
2. mailto:[email address]
3. http://www.leeds.gov.uk/

CCDPFOI, Leeds City Council

1 Attachment

Dear Jonathan Stevenson,

 

Please see the attached response.

 

Kind regards

 

 

Saleem Aziz

Information Governance Officer

t: 0113 39 52734

e: [1]cc[Leeds City Council request email]

e: [2][email address]

w: [3]www.leeds.gov.uk

 

Corporate Information Governance, Leeds City Council, Civic Hall,
Calverley Street, Leeds, LS1 1UR

 

“Information is everyone’s business and responsibility.”

 

 

show quoted sections

CCDPFOI, Leeds City Council

1 Attachment

Dear Jonathan Stevenson,

 

Please find attached the full details of all the Council’s LOBO loan
documentation.  We have redacted the bank details and signatures.

 

Kind regards

 

 

Saleem Aziz

Information Governance Officer

t: 0113 39 52734

e: [1]cc[Leeds City Council request email]

e: [2][email address]

w: [3]www.leeds.gov.uk

 

Corporate Information Governance, Leeds City Council, Civic Hall,
Calverley Street, Leeds, LS1 1UR

 

“Information is everyone’s business and responsibility.”

 

show quoted sections

 

References

Visible links
1. mailto:cc[Leeds City Council request email]
2. mailto:[email address]
3. http://www.leeds.gov.uk/