Agenda Item No
The Vale of Glamorgan Council
Cabinet Meeting: 2 December 2013
Report of the Leader
Tender for Banking Services
Purpose of the Report
1. To update members on the current position with the council's bankers and seek authorisation to tender for banking services in accordance with Contract Procedure Rules.
1. That the commencement of the tender process for the provision of banking services to the Council be approved.
2. That the appointment of the successful bidder be delegated to the Section 151 Officer, in consultation with the Leader and the Managing Director.
3. That the Head of Legal Services be authorised to sign the necessary contract documentation.
Reasons for the Recommendations
1-3. To ensure the smooth transition of banking services from the Co-op Bank to a new provider.
2. The Council currently has a contractual relationship with the Co-operative Bank plc. The Co-op bank provides business banking services to the council. The Co-op bank also provides payment transmission services via the Post Office and the PayPoint networks under a separate contract.
Relevant Issues and Options
3. As part of its recovery strategy the Co-op bank has decided to withdraw from the market of providing banking services to Local Authorities. The Co-op bank will continue to provide payment transmission services via the Post Office and PayPoint. No change to the payment transmission service is proposed at this time.
4. The bank is seeking to exit the local authority banking market in an orderly manner. In the short to medium term councils will still have access to banking services. As contracts expire the bank will not be seeking to tender for local authority business. The bank has also confirmed its understanding that councils may wish to bring forward the tendering process and exit their contractual relationship earlier. Exiting the contractual relationship prematurely will not result in any financial penalties to the Council.
5. There are operational issues in continuing to use the Co-op Bank for banking services as its rating for short term deposits falls below the minimum required by the Councils Treasury Management Policy Statement & Investment Strategy. Whilst the Co-op's ratings might improve if the recovery plan is successful, given the circumstances it would make sense to exit the contract and tender for banking services at the earliest opportunity.
6. The Council will need to review its banking requirements, develop a tender specification and a project plan for the implementation of the change of banker. This will be undertaken in line with the Council's project management methodology.
7. The contract will need to be tendered in line with EU Procurement rules as the total costs over the life of the contract are likely to exceed £150,000.
8. Given the complexity of the change process and the timings of the EU procurement rules it will not be feasible to implement by 1st April 2014. The implementation date will be considered by the project team, including whether it is feasible to change banks during the financial year.
Resource Implications (Financial and Employment)
9. The annual commission charge paid to Co-op Bank is currently around £45k p.a., depending on volumes and types of transactions during in the year.
10. Staff will be required to implement the project in accordance with the project plan. Every effort will be made to implement the project within existing resources.
11. It should be noted that control of the cash book and bank reconciliation is fundamental to the Council's financial standing. There may be a requirement to second staff to the project team and back fill with temporary staff to ensure a smooth transfer and continuity of the existing service. This will be assessed as part of the implementation plan and funded from departmental budgets or the development reserve.
Sustainability and Climate Change Implications
Legal Implications (to Include Human Rights Implications)
13. The banking tender is subject to EU procurement rules. The contract documentation with need to be reviewed and approved following advice from Legal Services.
Crime and Disorder Implications
Equal Opportunities Implications (to include Welsh Language issues)
16. Securing an effective banking service is essential to support the council in meeting its corporate objectives.
Policy Framework and Budget
17. This is a matter for Executive decision.
Consultation (including Ward Member Consultation)
18. Ward member consultation has not been undertaken given the nature of this project. Service users will be consulted as the implementation plan is developed.
Relevant Scrutiny Committee
19. Corporate Resources
Letter from Co-operative Bank plc dated 5 November 2013
Alan Jenkins - Head of Accountancy and Resources Management
Gill Howells - Operational Manager Finance and Systems
Sian Davies - Director of Resources