LOBO loans

The request was partially successful.

Dear Salford 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 agreements.

Yours faithfully,

Jamie Griffiths

FOI Requests, Salford City Council

Thank you for your message.

Your Freedom of Information request has been received and is being processed.

Kind regards

Salford City Council
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Van Damms, Andrew, Salford City Council

Dear Mr Griffiths,

 

I am writing in response to your Freedom of Information request of 14
March 2015. Your request and the council’s responses are as follows:

 

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

 

Fourteen.

 

2. When were they signed and by whom?

 

Eight in February 2004, one in March 2004, one in June 2005, one in July
2005, one in September 2005, one in March 2006, and one in March 2011.
These were signed on behalf of the local authority by the S151 officer.

 

3. With which financial institutions were they taken out?

 

FMS Wertmanagement AOR

Barclays Bank plc

Eurohypo

KBC Bank NV

Royal Bank of Scotland

KA Finanz AG

Dexia Municipal Agency

 

4. Who advised the council to enter the LOBO(s)?

 

The City Council would have consulted with its treasury management
advisors, however, the decision to proceed was made entirely by the City
Council, specifically by the S151 Officer after consultation with members
and under delegated powers contained within the City Council’s annual
Treasury Management Strategy Statement.

 

5. Since each Contract has been signed, has the lender exercised their
option and changed the interest rate?

 

This has not happened.

 

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

 

Not applicable.

 

7. Please provide a copy of the original, signed LOBO agreements.

 

Specific details of the loans and the loan contracts are considered to be
exempt information under section 43 (2) of the Act. The process of
negotiating the borrowing and lending of money is a commercial activity.
Section 43 (2) provides that information is exempt information if its
disclosure would, or would be likely to, prejudice the commercial
interests of any person (including the public authority holding it). The
council considers that the disclosure of this information could prejudice
the commercial interests of the council and those of the lenders. Specific
terms of loans are commercially sensitive and neither the lender nor
borrower would expect specific details of the terms of a loan to be
disclosed to the public and to do so could significantly undermine the
relationship between lender and borrower.

 

In terms of the public interest test, release of details of the terms of
the loans would increase public understanding of the council's borrowing
activities. However, weighing against disclosure, the release of this
information could undermine the relationship between lender and borrower
as set out above and impact on the council’s future commercial activities.
After careful consideration, the council has decided that the public
interest arguments in favour of maintaining the exemption significantly
outweigh the public interest arguments supporting disclosure.

 

The council considers it has fulfilled your Freedom of Information
request. If you are dissatisfied with the way your request has been
handled, or wish to appeal this decision, you may wish to contact David
Hunter, Assistant Director, ICT, Customer and Support Services
Directorate; email: [1][email address]

 

Details of how to lodge an appeal can be found at [2]www.salford.gov.uk.

 

If you are still dissatisfied following any internal appeal, you may wish
to contact the Information Commissioner's Office, Wycliffe House, Water
Lane, Wilmslow, Cheshire SK9 5AF - [3]www.ico.org.uk Tel: 0303 123 1113
(local rate) or 01625 545 745.

 

Yours sincerely

 

Andrew van Damms

Principal Information Governance Officer

 

Business Support and Corporate Information Resource Team, ICT Services,
Customer and Support Services Directorate, Salford City Council, Third
Floor, Salford Civic Centre, Chorley Road, Swinton, M27 5BY

 

T: 0161 793 3957 | F: 0161 794 5221 | E: [4][email address]

 

P Please consider the environment before printing this e-mail

 

 

 

 

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Jamie Griffiths

Dear Salford City Council,

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

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

In particular I feel the responses to parts 4 and 7 to be unsatisfactory.

In response to part 4 ("Who advised the council to enter the LOBO(s)?") the Council mentions Treasury Management Advisers but fails to name the firms providing the advice. Can the firms acting as Treasury Management Advisers to the Council when the LOBO loan agreements were signed please be named?

In response to part 7 ("Please provide a copy of the original, signed LOBO agreements.") the Council has invoked Section 43 (2) of the Freedom of Information Act 2000 and applied an exemption. I feel that both the prejudice test and the public interest test have been applied incorrectly.

The Ministry of Justice provides guidance on applying exemptions under Section 43 of the FOIA and this guidance includes the following:

"There is a distinction between commercial and financial interests:
- a commercial interest relates to a person's ability successfully to participate in a commercial activity
- a financial interest concerns the financial position of an individual or organisation.
Although the commercial and financial interests of a commercial entity may be extremely closely related - if it has a weak financial position, that will almost certainly affect its ability to engage in commercial activity - that is not necessarily so in the case of a public authority."

The Information Commissioner's Office also provides guidance and this includes the following:

"There is a distinction to be drawn between commercial interests and financial interests. While there will be many cases where prejudice to the financial interests of a public authority may affect its commercial interests, this is not necessarily the case. "

The Council's response states "The council considers that the disclosure of this information could prejudice the commercial interests of the council and those of the lenders." However, the Council's borrowing is purely a financial activity undertaken in order to support its main activities. If the financial interests of the Council are likely to be prejudiced by disclosure of the information and this would in turn prejudice the Council's commercial activities then this must be supported by reasoned argument as per the MoJ guidance referenced above:

"It is important to note, however, that a simple assertion by an individual or body that there would be prejudice to his or its interests is not sufficient. The assertion must be supported by reasoned argument, and where practicable by empirical evidence. In particular it is not sufficient for a body simply to mark a document commercial in confidence for the information in it to be exempt."

As for commercial sensitivity in relation to the lenders, please note that a large number of UK authorities have responded to similar requests by disclosing their LOBO loan agreements. As such, contracts form all the lenders listed are already in the public domain. Furthermore, these are all large financial institutions with such large loan books that the diclosure of the specific terms of a single loan could cause only trivial prejudice to commerical interests.

In applying the public interest test the Council has considered the general public interest in disclosure, namely "release of details of the terms of the loans would increase public understanding of the council's borrowing activities." However, the Council has failed to take into consideration the specific public interest in disclosure: LOBO loans are very long term loans and also complex financial instruments with embedded derivatives which could adversely affect the Council's financial position and endanger its ability to carry out essential services. There is also considerable likelihood that they represent poor value for money when compared with PWLB loans over the same period. In order to assess the fair value of the loans and make the true financial position of the Council publicly known it is essential that the contracts are disclosed.

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,

Jamie Griffiths

FOI Requests, Salford City Council

Thank you for your message.

Your Freedom of Information request has been received and is being processed.

Kind regards

Salford City Council
DISCLAIMER: The information contained in this communication/message from [Salford City Council request email] sent on Wed May 20 18:53:16 2015 is confidential. It is intended solely for the addressee(s) [FOI #258276 email]

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Haslam, Carolyn, Salford City Council

Dear Mr Griffiths

 

Please accept my apologies for the delay in responding to your internal
review request. I am dealing with your request and will respond to you
shortly.

 

Regards

 

Carolyn

 

Carolyn Haslam

Information Governance Team

Civic Centre

Chorley Road

Swinton

M27 5BY

[1][email address]

 

 

 

DISCLAIMER: The information contained in this communication/message from [email address] sent on Thu Jun 18 16:02:26 2015 is confidential. It is intended solely for the addressee(s) [FOI #258276 email]

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As a public body, Salford City Council may be required to disclose this email [or any response to it] under the Freedom of Information Act 2000, unless the information in it is covered by one of the exemptions in the Act.
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Hunter, David, Salford City Council

3 Attachments

Dear Mr Griffiths,

I refer to your request for information of the 14th March 2015 and your
subsequent request for an internal review on the 20^th May 2015. Please
accept my apologies for the delay in responding to you.

Your original request and the council’s response on 10^th April 2015 is attached to this email.

The outcome of this internal review is also attached as a letter entitled ‘Jamie Griffiths IR Response.

Also attached is a spreadsheet containing further information in regard to the LOBO agreements that you requested.

 

That concludes our review of our initial response to your request. If you
continue to remain dissatisfied with the handling of your FOI internal
review request you may wish to contact the Office of the Information
Commissioner at: - Wycliffe House, Water Lane, Wilmslow, Cheshire, SK9
5AF   [1]www.informationcommissioner.gov.uk  Telephone: 08456 30 60 60 or
01625 54 57 45 Fax: 01625 524510

 

 

Yours sincerely

 

David Hunter

Assistant Director ICT

Customer and Support Services

Salford Civic Centre
Chorley Road
Swinton
M27 5DA

 

 

 

 

 

 

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Jamie Griffiths left an annotation ()

Maturity dates and interest rates withheld citing S43(2) - refer to ICO.