An internal report by Cornwall Council titled ‘Refinancing of the Council’s Two Royal Bank of Scotland Inverse Floating LOBOs’, confirms support for the Section 151 Officer’s delegated decision to redeem two existing RBS inverse floating LOBO’s.

The report states that ‘The Council has over the past couple of years been in contact with RBS over whether there is any opportunity to renegotiate or terminate these loans. Until recently these requests have not resulted in any satisfactory offers to the Council. In August 2018 a more positive response was received and meaningful discussions started which resulted in an offer in October 2018 that was far more acceptable.’

The report furthers, ‘Following receipt of the offer the Council engaged its Treasury adviser, Link Asset Services, to model the offer and subsequently to go back to the Bank to negotiate further on behalf of the Council. The outcome of this is that the offer was improved and is currently at a level that Link do not believe will be bettered’.

The council states that ‘the premium to redeem the loans was £47m which is £84m (64%) less than the fair value calculation of a premium.’