My own personal blog. Newham Council Deputy Mayor, Cabinet member for Housing Services & Vice Chair of Local authority Pension Fund Forum. Councillor for West Ham ward, UNISON Branch Chair, Regional Council Officer & NEC member, Centre left and proud member of Labour movement family. No trolls please.
Monday, March 06, 2017
Newham ditches LOBOs pledging £94m in savings
This has been one of the most popular stories on the Local Government finance website Room 151 recently. By Colin Marrs. LOBOS is the Spanish name for wolf.
"Newham Council has agreed a deal with Barclays to switch almost half of its Lender Option Borrower Option (LOBO) loans into fixed rate loans.
The council — which had the biggest LOBO portfolio of any council in the UK — has come under intense pressure from campaigners and featured prominently in a Channel 4 Dispatches programme last year which sought to highlight the cost of LOBOs to the public purse.
Room151 understands the council has now fixed the rate on £248m of its £563m portfolio, following lengthy negotiations between senior officials at the council and the bank.
Lester Hudson, cabinet member for finance, and commercial opportunities, said: “We took out these types of LOBOs as they represented the best deal for the council at the time and (they) have saved us millions of pounds in interest payments.
“They were part of our balanced and award winning strategy which includes a balanced approach to risk.
“As a council, and in line with good stewardship, we are always working to reduce the cost of our borrowing. We have taken independent legal and financial advice on this agreement and it is now the right time for us to restructure these loans.”
In a statement, Newham said it would save £94m in interest payments that it would otherwise have paid on the LOBOs over their remaining life.
This figure was reached by multiplying the current annual interest payments by 60 years — the average term length of the loans.
However, when approached by Room151, the council was unable to confirm the rate agreed on the new loan.