Treasury Policy
Introduction
This policy sets out the key controls placed on the treasury management function
within Finance at the University. It contains guidance on a number of key areas and
focuses upon the risks that the University faces in its day-to-day activities.
The CIPFA Code
The Chartered Institute of Public Finance and Accountancy (CIPFA) reissued a revised
Treasury Management Code in 2011. The University has broadly adopted the format
of this code.
The following four clauses are taken from the code and are adopted by the
University as the basis for its treasury management policy:
1. The University will create and maintain, as the cornerstones for
effective treasury management:
– a treasury management policy statement, stating the policies and
objectives of its treasury management activities (this policy)
– suitable treasury management practices (TMPs), setting out the
manner in which the University will seek to achieve those policies
and objectives, and prescribing how it will manage and control
those activities.
The content of the policy statement and TMPs will follow the
recommendations contained in Sections 6 and 7 of the Code, subject only to
amendment where necessary to reflect the particular circumstances of the
University. Such amendments will not result in the University materially
deviating from the Code’s key recommendations.
2. Scrutiny and Finance Committee will receive reports on its treasury
management policies, practices and activities, including, as a
minimum, an annual strategy and plan in advance of the year and an
annual report after its close, in the form prescribed in its TMPs. The
annual strategy will be reported to Council.
3. Scrutiny and Finance Committee delegates responsibility for the
implementation and regular monitoring of its treasury management
policies and practices to the Director of Finance (except where
specifically indicated in the Policy). The Director of Finance will ensure
the execution and administration of treasury management decisions in
accordance with the University’s policy statement and TMPs and, if
he/she is a CIPFA member, CIPFA’s Standard of Professional Practice
on Treasury Management.
4. The University nominates Scrutiny and Finance Committee to be
responsible for ensuring effective scrutiny of the Treasury Management strategy and policies.
Should there arise any conflict between this Treasury Policy, and the Financial
Regulations, the Financial Regulations should be taken as having precedence.
Appendix D sets out the annual decisions delegated to Scrutiny and Finance
Committee, as well as those decisions in which Investments and Development
Committee is involved.
Treasury Management Policy Statement
The CIPFA Treasury Management Code recommends that the University adopt the
following form of words to define the policies and objectives of its treasury
management activities:
1. The University defines its treasury management activities as:
The management of the University’s investments and cash flows, its
banking, money market and capital market transactions; the effective
control of the risks associated with those activities; and the pursuit of
optimum performance consistent with those risks. For the avoidance of
doubt, it does not include the management of the University’s long
term investments, which fall under the remit of Investments and
Development Committee.
2. The University regards the successful identification, monitoring and
control of risk to be the prime criteria by which the effectiveness of its
treasury management activities will be measured. Accordingly, the
analysis and reporting of treasury management activities will focus on
their risk implications for the University.
3. The University acknowledges that effective treasury management will
provide support towards the achievement of its business and service
objectives. It is therefore committed to the principles of achieving
value for money in treasury management, and to employing suitable
comprehensive performance measurement techniques, within the
context of effective risk management.
In addition, The University’s other stated objectives are:
• To maintain financial stability;
• To minimise the costs of funds, in relation to the University’s debt;
• To maximise returns on investments, within an agreed risk profile;
• To preserve the University’s cash balances from any loss;
• To minimise fluctuations in accounting profit, resulting from interest rate
and foreign currency exposure;
• To ensure all borrowings are in compliance with the requirements of the
Office for Students;
• To ensure compliance with any relevant banking or debt covenants
Treasury Management Practices
1. Risk management
General statement
The Director of Finance will design, implement and monitor all arrangements
for the identification, management and control of treasury management risk,
will report at least annually on the adequacy/suitability thereof, and will
report to UEB or to Council as required, as a matter of urgency, the
circumstances of any actual or likely difficulty in achieving the University’s
objectives in this respect. In respect of each of the following risks, the
arrangements which seek to ensure compliance with these objectives are set
out throughout this document.
1.1 Credit risk management
The University regards a key objective of its treasury management activities
to be the security of the principal sums it invests. Accordingly, it will ensure
that its counterparty lists and limits reflect a prudent attitude towards
organisations with whom funds may be deposited, and will limit its
investment activities to the instruments, methods and techniques referred to
in section 4 Approved instruments, methods and techniques. It also recognises
the need to have, and will therefore maintain, a formal counterparty policy in
respect of those organisations from which it may borrow, or with whom it
may enter into other financing arrangements.
1.2 Liquidity risk management
The University will ensure it has adequate though not excessive cash
resources, borrowing arrangements, overdraft or standby facilities to enable
it at all times to have the level of funds available to it which are necessary for
the achievement of its objectives.
The University will only borrow long-term in advance of need where there is a
clear business case for doing so and will only do so for approved capital
commitments.
The University should maintain and formally identify a formal liquid asset
reserve. The amount of the reserve should be reviewed regularly by
Investments and Development Committee. The current reserve is £30m, of
which £10m should normally be held in cash as working capital. A total of
£20m of other liquid assets from the University’s endowment funds will in the
first instance be designated as the current liquid reserve, accepting that this
may place some restrictions on its future use. Investments and Development
Committee may designate other investments or cash balances at some point
in the future. An outline of the Liquidity Policy can be found in Appendix C,
and Appendix D sets out formally the role of Investments and Development
Committee in this decision.
1.3 Interest rate risk management
The University will manage its exposure to fluctuations in interest rates with a
view to containing its interest costs, or securing its interest revenues, in
accordance with the amounts provided in its budgetary arrangements as
amended in accordance with section 6 Reporting requirements and
management information arrangements.
It will achieve this by the prudent use of its approved financing and
investment instruments, methods and techniques, primarily to create stability
and certainty of costs and revenues, but at the same time retaining a
sufficient degree of flexibility to take advantage of unexpected, potentially
advantageous changes in the level or structure of interest rates. This should
be the subject to the consideration and, if required, approval of any policy or
budgetary implications.
1.4 Exchange rate risk management
It will manage its exposure to fluctuations in exchange rates so as to minimise
any detrimental impact on its budgeted income/expenditure levels.
The University transacts in a wide variety of foreign currencies, with only
EUROs being received and expended in any significant amounts.
The University’s standard policy is not to speculate in currencies and to
minimise accounting losses by paying foreign currency creditors promptly,
and by translating foreign currency receipts promptly and by banking them
regularly in the sterling account (with the exception of EUROs). An exception
to this is prefinancing for EU funded contracts (see below).
EUROs are frequently received on behalf of sub-contractors and partners on
European projects, and then distributed to those third parties. Since 1
January 2002 there has also been a requirement to pay some European
suppliers in EUROs. EUROs will not normally be held by the University, except
where
• there is an identifiable short term (normally less than one month)
liability to pay third parties in EUROs, and then only to the extent of
that liability.
• EU pre-financing funds are being held pending release by an audit
approved certification.
• a float of EUROs will be maintained to pay suppliers. This float should
not normally exceed EUR 1,000,000
To this end, Research Accounts and the Treasury Assistant must be informed
of any EURO receipts immediately, whereupon Research Accounts will
provide the Treasury Assistant with a EURO cash flow forecast relating to the
receipt, showing how much of the receipt is due to the University and how
much is due to partners, giving a due date. The amount due to the University
will be translated immediately.
For any EUROs that are not translated immediately, the Treasury Assistant
will seek to maximise interest earnings by placing EURO funds on deposit for
appropriate periods with the University’s bankers.
The introduction of electronic purchase to pay means that for most cases
payments made in a currency other than sterling will be recorded as a
creditor on the University’s ledger system before they are paid. Orders can
be raised in most currencies; the sterling value of the commitment, and of the
subsequent creditor after receipt of the goods/services, will be based upon a
monthly exchange rate held in the University’s ledger system. The payment
of an invoice, at a spot rate, will give rise to either an exchange gain or loss.
This gain or loss, unless there is a contracted exchange rate in force (e.g., for
an EU contract), will be taken to the account code and project on which the
order was originally raised. This is likely to be a school or function code, as
opposed to central funds.
The University also issues invoices in foreign currency. Again, any foreign
exchange rate gain or loss arising when such an invoice is settled will be taken
to the account code and project where the invoice was originally raised
(unless other agreements are in place, for example in the case of research
contracts with a fixed rate).
Under EU Framework regulations, any interest generated on undistributed
pre-financing may be taken into account when calculating the final amount
due to the University as part of the research contract, and therefore the
University must be able to identify how much interest has been generated by
these amounts.
1.5 Refinancing risk management
The University will ensure that its borrowings, private financing and
partnership arrangements are drawn up to provide both flexibility and value
for money. To minimise risk, the University will avoid overreliance on any one
source of funding.
Loan Arrangements
See the table below for details of the University’s loan arrangements.
The Treasury Manager is responsible for monitoring the University’s
compliance with loan covenants, and preparing any reports to lenders as set
out in loan agreements.
1.6 Legal and regulatory risk management
The University will ensure that all of its treasury management activities
comply with its Financial Regulations and other regulatory requirements. In
framing its credit and counterparty policy under section 5 Credit and
Counterparty Risk Management, it will ensure that there is evidence of
counterparties’ powers, authority and compliance in respect of the
transactions they may effect with the University, particularly with regard to
duty of care and fees charged.
The University recognises that future legislative or regulatory changes may
impact on its treasury management activities and, so far as it is reasonably
able to do so, will seek to minimise the risk of these impacting adversely on
the University.
1.7 Fraud, error and corruption, and contingency management
The University will ensure that it has identified the circumstances which may
expose it to the risk of loss through fraud, error, corruption or other
eventualities in its treasury management dealings. Accordingly, it will employ
suitable systems and procedures, and will maintain effective contingency
management arrangements, to these ends.
1.8 Market risk management
The University will seek to ensure that its treasury management policies and
objectives will not be compromised by adverse market fluctuations in the
value of the principal sums it invests, and will accordingly seek to protect
itself from the effects of such fluctuations.
2 Performance measurement
The University is committed to the pursuit of value for money in its treasury
management activities, and to the use of performance methodology in
support of that aim, within the framework set out in its treasury management
policy statement.
Accordingly, the treasury management function will be the subject of ongoing
analysis of the value it adds in support of the University’s stated business or
service objectives. It will be the subject of regular examination of alternative
methods of service delivery, and of the scope for other potential
improvements.
For non-core daily surpluses, the following performance measure is to be
adopted:
• Comparison to three month SONIA
• The base rate is to be included for comparison purposes.
• This information will be distributed to the Director of Finance, and
included in the University’s Management Information Pack (MIP). On
a yearly basis, this comparison will be presented to Scrutiny and
Finance Committee for information, along with the revised Treasury
Policy.
The adoption of a performance measure should not be interpreted as undue
pressure on the University to attain certain rates; the aim remains to balance
the pursuit of optimum attainment with the need for both flexibility and risk
management. Should funds available for investment be immaterial, or the
returns generated also immaterial, the reporting restrictions above may be
suspended until such time as sufficient funds can be invested that provide
meaningful management information. This decision should be made by the
Director of Finance and recorded in the annual Treasury Management report
to Scrutiny and Finance Committee.
3 Decision-making and analysis
The University will maintain full records of its treasury management
decisions, and of the processes and practices applied in reaching those
decisions, both for the purposes of learning from the past, and for
demonstrating that reasonable steps were taken to ensure that all issues
relevant to those decisions were taken into account at the time. These will be
filed and retained according to the University’s statutory requirements for
keeping records.
4 Approved instruments, methods and techniques
The University will undertake its treasury management activities by
employing only those instruments, methods and techniques detailed in the
schedule to this document, and within the limits and parameters defined in
section 1 Risk management.
The University does not in its normal course of events engage in the use of
derivatives (potentially volatile tradable financial instruments whose values
may be determined by the movement of an underlying asset or exchange
rate). Examples of these may be forward contracts, options, swap
agreements or any other arrangement structured to hedge against FOREX or
interest rate movement. Historically, the University’s future cash flows
denominated in foreign currency have not proven predictable enough to
make the use of such instruments either cost-effective or efficient.
Moreover, the use of hedging arrangements may expose the University to
unwanted FOREX risk if wrongly or inappropriately used.
Any requests to fix exchange rates through any mode of hedging must be
addressed to the Director of Finance in the first instance. The Director of
Finance shall approve all other forms of derivative transaction, such as
interest rate swaps or fixes.
5 Organisation, clarity and segregation of responsibilities, and dealing
arrangements
The University considers it essential, for the purposes of the effective control
and monitoring of its treasury management activities, for the reduction of the
risk of fraud or error, and for the pursuit of optimum performance, that these
activities are structured and managed in a fully integrated manner, and that
there is at all times a clarity of treasury management responsibilities.
The principle on which this will be based is a clear distinction between those
charged with setting treasury management policies and those charged with
implementing and controlling these policies, particularly with regard to the
execution and transmission of funds, the recording and administering of
treasury management decisions, and the audit and review of the treasury
management function.
If and when the University intends, as a result of lack of resources or other
circumstances, to depart from these principles, the Director of Finance will
ensure that the reasons are properly reported in accordance with section 6
Reporting requirements and management information arrangements, and the
implications properly considered and evaluated.
The Director of Finance will ensure that there are clear written statements of
the responsibilities for each post engaged in treasury management, and the
arrangements for absence cover. The Director of Finance will also ensure that
at all times those engaged in treasury management will follow the policies
and procedures agreed by the University.
The Director of Finance will ensure there is proper documentation for all
deals and transactions, and that procedures exist for the effective
transmission of funds.
The delegations to the Director of Finance in respect of treasury management
are set out in the University’s Financial Regulations, and amplified below. The
Director of Finance will fulfill all such responsibilities in accordance with the
University’s Treasury Policy.
Transfer of Funds to Subsidiary Companies
The Treasury Assistant is authorised to make transfers of amounts between
University accounts (Call Account, Petty Cash accounts, etc.) without need for
a counter- signatory.
The Treasury Assistant is authorised to make these transfers.
No transfers can be made to dormant subsidiaries without the approval of the
Director of Finance.
The Treasury Assistant is authorised to make transfers of funds from UK
subsidiaries to the University, providing that (a) such sums represent income
received by the subsidiary and (b) the subsidiary’s liabilities are normally
settled by the University’s AP function, and any cash at bank held by the
subsidiary is therefore not required to pay suppliers.
To other branches or subsidiaries (in Malaysia, Germany, Finland, South
Africa, India or elsewhere), the Director of Finance must authorise payment.
A number of subsidiaries have a formal loan agreement in place with the
University, which govern repayments, interest rates, etc. Before any sums are
transferred to / from an entity, the terms of these agreements should be
examined by the Treasury Manager to ensure that the proposed transaction is
in accordance with the agreement, and the Director of Finance see evidence
of this before authorisation The agreements should be reviewed on an annual
basis by the Group Financial Accountant to ensure compliance with local
legislation and accounting standards.
Where there is no formal loan agreement in place, the University pays (and
receives) interest to (from) subsidiaries based on the level of inter-company
indebtedness. The rate applied in this case is based upon the University’s
actual return on its short-term cash investments.
Authorising Short-Term Investment of Surpluses
Based on the University’s daily cash position, and using information regarding
market conditions, the Treasury Assistant will recommend the amount and
period for lending. The overnight call account is used only as a contingency
arrangement, usually for funds that have arrived too late in the day to be
placed on the money market, or if the interest receivable on deposit exceeds
the call amount interest by less than the transfer cost.
An approved list of counterparties can be found in Appendix A. This list of
counterparties are all UK-based and likely to enjoy some level of UK
government support; they represent a low-risk range of counterparties. The
Treasury Manager can approve all lending within the terms and limits in this
approved list. All approved counterparties must have a credit rating within
the ranges set out in appendix B.
The University receives regular credit rating updates, to ensure individual
ratings are monitored. Each month a summary of institutional ratings is
obtained and saved on a shared Finance drive. The Treasury Manager will
monitor all approved counterparty credit ratings on a weekly basis.
The Treasury Manager is responsible for alerting the Director of Finance to all
changes in credit ratings relating to the above counterparties. In the event of
a downgrade, the following procedure should be followed:
• If after the downgrade, the counterparty remains within the credit limits set
out in appendix B, then the University may continue to invest on the
discretion of the Director of Finance
• If the counterparty no longer remains within the limits in appendix B, then
the University should cease using that counterparty as soon as practicable
without jeopardising the capital invested.
Counterparties can be added to or removed from the approved list in
Appendix A on the approval of the Director of Finance, but again only as long
as new counterparties meet the credit ratings in Appendix B. Such changes
must be reflected in the next version of the Treasury Policy submitted to
Scrutiny and Finance Committee for approval.
Should the Director of Finance consider that the credit ratings in Appendix B
are no longer workable or appropriate, then a revised set of minimum credit
ratings must be presented to Scrutiny and Finance Committee as soon as
practicable.
At the discretion of the Director of Finance, arrangements for longer terms
than one year can be made with University’s current bankers (Lloyds) where
there is a compelling financial reason to do so and, in particular, where
investment returns are greater than would be available from funds invested
for less than one year.
There may be times when, due to timing issues and the size of a receipt, it is
not possible to place the funds on deposit, and thereby an amount greater
than £20m is held with the University’s main bankers. Normally the amount
of time such funds remain with the University’s main bankers should be
limited to a maximum of one week. The Director of Finance should be alerted
immediately to any breach of the £20m limit with Lloyds.
6 Reporting requirements and management information arrangements
The University will ensure that regular reports are prepared and considered
on the implementation of its treasury management policies; on the effects of
decisions taken and transactions executed in pursuit of those policies; on the
implications of changes, particularly budgetary, resulting from regulatory,
economic, market or other factors affecting its treasury management
activities; and on the performance of the treasury management function.
As a minimum;
Scrutiny and Finance Committee will receive:
• an annual report on the strategy and plan to be pursued in the coming
year
• an annual report on the performance of the treasury management
function, on the effects of the decisions taken and the transactions
executed in the past year, and on any circumstances of non-compliance
with the University’s treasury management policy statement and TMPs
• an annual statement on compliance with Loan Covenants, also including
compliance with any sanctions requirements imposed by lenders /
bankers
Review Period
This policy will be reviewed annually.
7 Budgeting, accounting and audit arrangements
The University will account for its treasury management activities, for
decisions made and transactions executed, in accordance with appropriate
accounting practices and standards, and with any regulatory requirements in
force for the time being.
8 Cash and cash flow management
The University will manage liquidity through management of debtors and
creditors balances, and through cash flow forecasting.
Unless statutory or regulatory requirements demand otherwise, all monies in
the hands of the University will be under the control of the Director of
Finance and will be aggregated for cash flow and investment management
purposes. Cash flow projections will be prepared on a regular and timely
basis, and the Director of Finance will ensure that these are adequate for the
purposes of monitoring compliance with TMP1[1] liquidity risk management.
The present arrangements for preparing cash flow projections, and their
form, are set out below:
A rolling 24-month daily cash flow will be prepared and maintained by the
Treasury Manager. This plan will agree, on a monthly basis, with the
University 10-year cash flow forecast.
Each day, the level of project cleared funds will be established using this
forecast and the University’s internet banking platform.
The cash flow and projected cleared fund will be used to establish the level of
surplus cash available for lending, and the period for which it is available.
On a weekly basis the Treasury Assistant will produce:
• 8 week rolling cash flow forecast
• A summary of short-term cash deposits
The Director of Finance should be specifically alerted to all forecast negative
cash balances. The University will inform the Office for Students of all
negative net cash book balances that meet their criteria for notification. The
specific requirement for short-term borrowing not to exceed 5% of
consolidated turnover (as defined by the last audited accounts) for 35
consecutive days will be monitored daily by the Treasury Manager.
The Director of Finance will be responsible for long-term cash flow forecasting
(i.e. periods of between 1 year to 10 years) and the production of forecasts
for submission to the Office for Students.
9 Money laundering and Sanctions
Money Laundering
Money laundering is the act of concealing or disguising the nature, location,
source, ownership or control of money in order to avoid a transaction reporting requirement and/or to disguise the fact that the money was
acquired by illegal means.
The University is alert to the possibility that it may become the subject of an
attempt to involve it in a transaction involving the laundering of money.
Accordingly, it will maintain procedures for verifying and recording the
identity of counterparties and reporting suspicions, and will ensure that staff
involved in this are properly trained.
The Universities anti-money laundering policy
The Head of Transactional Services is responsible for implementing
procedures around receiving and refunding money.
Any suspicions of money-laundering should be communicated to the Director
of Finance, following the procedure set out in the policy. Should any other
fraudulent activity be suspected, reference should be made to the
University’s Fraud Policy and Fraud Response Plan.
Sanctions
The University’s Treasury Manager will liaise with the University’s bankers in
relation to any reporting requirements in relation to sanctions imposed upon
certain countries or individuals.
10 Training and qualifications
The University recognises the importance of ensuring that all staff involved in
the treasury management function are fully equipped to undertake the duties
and responsibilities allocated to them. It will therefore seek to appoint
individuals who are both capable and experienced and will provide training
for staff to enable them to acquire and maintain an appropriate level of
expertise, knowledge and skills. The Director of Finance will recommend and
implement the necessary arrangements.
The current job description of the Treasury Manager specifies a qualified
accountant. On a yearly basis the Treasury Manager will, as part of the
Professional Development Review process, identify areas where potential
training needs arise and organise suitable materials for this.
The Treasury Policy will be made available to all University members via the
Finance Website. All staff with Treasury responsibilities will be supplied with a
copy.
11 Use of external service providers
The University recognises that whilst at all times responsibility for treasury
management decisions remains with the University there is the potential
value of employing external providers of treasury management services, in
order to acquire access to specialist skills and resources. When it employs
such service providers, it will ensure it does so for reasons which will have
been submitted to a full evaluation of the costs and benefits. It will also
ensure that the terms of their appointment and the methods by which their
value will be assessed are properly agreed and documented, and subjected to
regular review. And it will ensure, where feasible and necessary, that a
spread of service providers is used, to avoid overreliance on one or a small
number of companies. Where services are subject to formal tender or re-
tender arrangements, legislative requirements will always be observed. The
monitoring of such arrangements rests with the Director of Finance.
12 Corporate governance
The University is committed to the pursuit of proper corporate governance
throughout its businesses and services, and to establishing the principles and
practices by which this can be achieved. Accordingly, the treasury
management function and its activities will be undertaken with openness and
transparency, honesty, integrity and accountability.
The University has adopted and has implemented the key recommendations
of the Code. This, together with the other arrangements detailed in this
document, are considered vital to the achievement of proper corporate
governance in treasury management, and the Director of Finance will monitor
and, if and when necessary, report upon the effectiveness of these
arrangements.
13 Ethical Banking
The University recognises the importance of aligning its banking relationships with its
wider social responsibilities. The University will therefore adopt the following
principles:
1. The University will consider Ethical, Social and Governance criteria in its choice of
banking partner;
2. The University will monitor the progress of its banking partners in reducing their
carbon footprint;
3. The University will monitor the progress of its banking partners in reducing their
exposure to lending to the fossil fuel sector.
4. The University will consider ESG-related borrowing in any future debt it takes on.
5. The University will expect to receive annual updates on ESG issues from its banking
partner(s) and will include a summary of this as part of this annual report to SFC.
Conclusion
This Treasury Policy will be revised annually, as noted above, and presented to
Scrutiny and Finance Committee. Should, however, any urgent issue arise, the
Director of Finance can request that the Treasury Manager revise the Policy, and
present it to the next meeting of the Committee for approval. The Treasury Manager
shall be responsible for alerting the Director of Finance any issues that they believe
may require any such amendment.
Version 15
S E Mealor
Treasury Manager
December 2023
Approved by Scrutiny and Finance Committee, xxxx
Appendix A
The Treasury Manager can approve investments with the following counterparties,
who at the time of approval of this policy meet the requirements found in Appendix
B.
| Name of Counterparty | Size £m |
Length of Investment Months |
S&P | Moody's | Fitch |
| Royal London Cash plus fund | 10 | n/a | n/a |
n/a | AAA |
| HSBC | 20 |
Up to 3 |
A1 |
P1 | F1+ |
| Lloyds (inc BoS) |
20 | Up to 3 | A1 | P1 | F1 |
| Barclays Bank PLC |
20 | Up to 3 | A1 | P1 | F1 |
| Santander | 20 | Up to 3 | A1 | P1 | F1 |
| Nationwide | 20 | Up to 3 | A1 | P1 | F1 |
For any deposits over three months, the Director of Finance must approve.
Credit ratings correct as of 19/10/2023
Appendix B
• An acceptable banking counterparty meet at least two of the ratings below:
| S&P rating |
Moody’s rating | Fitch rating |
| A1 | P-1 |
F-1 |
• For a money market fund, a credit rating of AAA from any of the three main rating
agencies is required.
Appendix C –Liquidity Policy
In July 2021 the University closed the RET and transferred all assets into the
University. In June 2021 Strategy and Finance Committee and Investments and
Development Committee approved the setting-up two new funds – a Long Term
Investment Fund and a Liquidity Fund. The latter was set up to hold £10m in less
volatile assets which could be liquidated within a reasonable timescale to provide
emergency working capital. In addition, up to £20m of the Long Term Investment
Fund should normally be held in assets liquid enough to be realised within a longer
but still short-term timescale.
Liquidity Policy
• The University will maintain a Liquidity Reserve Fund held by its Investment
Managers. This should be held in lower-risk investments with a target return not to
exceed CPI+2%.
• The Liquidity Reserve Fund should be available to be realised within two months.
• In addition the University will maintain £20m of its Long Term Investment Fund in
liquid enough form to be realised within three months.
• The University should ensure it can obtain a £10m overdraft facility with its current
bankers at short notice (defined as within three months).
• The University should aim to keep at least £10m of cash at all times, and this should
be reflected in its long-term planning. However, it is recognised that this might not
always be possible to external circumstances.
• This policy is to be approved annually by Scrutiny and Finance Committee and
passed to Investments and Development Committee for implementation.
Appendix D
Summary of Key Links between the Treasury Policy and University Committees,
and the Decisions Delegated to these Committees
The University’s Council delegates oversight over the Treasury Policy to Scrutiny and
Finance Committee, under the heading of “Recommending to the Council and
implementing general financial Policy, including the Treasury Policy” (point 6 a(ii) in
its Terms of Reference)
In addition, the University’s Investments and Development Committee remit touches
upon the University’s Treasury Policy, as the Treasury Policy is closely linked to key
aims of the Investments and Development Committee.
Information Received and Decisions Undertaken by Scrutiny and Finance Committee
in Relation to the Treasury Policy
• To receive an annual report on the strategy and plan to be pursued in the
coming year
• To receive an annual report on the performance of the treasury
management function, on the effects of the decisions taken and the
transactions executed in the past year, and on any circumstances of non-
compliance with the University’s treasury management policy statement
and TMPs
• To receive an annual statement on compliance with Loan Covenants, also
including compliance with any sanctions requirements imposed by lenders
/ bankers
• To approve the updated treasury policy, including the list of
counterparties and minimum short-term deposit credit ratings therein
• To receive and approve a copy of a Liquidity Reserve Policy, which will
then be passed to Investments and Development Committee for their
implementation
• To approve any amendments to minimum short-term credit ratings on an
ad hoc basis throughout the year
The normal timetable for the presentation of the annual report and Treasury
Policy shall be annually, in January
Information Received and Decisions Undertaken by Investments and Development
Committee in Relation to the Treasury Policy
• To receive as soon as possible after Scrutiny and Finance Committee a
copy of the approved Treasury Policy, and all other reports outlined above
• To receive the Liquidity Reserve Policy after it has first been approved by
Scrutiny and Finance Committee