College may abandon Irish banks

By Meadhbh McHugh

College has implemented a new Treasury Management Policy which sets out the criteria that institutions holding College funds must meet. However these criteria are likely not to be met by Irish banks if the Government bank guarantee scheme is removed. A subsequent drop in the rating of Irish banks could lead to a removal of College funds.

According to internal accounts dated from September 2009 College had €200 million in cash and equivalents in Irish Banks; Bank of Ireland being the main depository. The Government-backed banking scheme currently limits the risk to College funds. The bank guarantee scheme, which had been due to expire on 28 September and was recently renewed until December, will be reviewed again by the Government at the end of the year and will then have to be approved by the European Commission. College’s plan to move its funds from Irish Banks will only occur if the scheme is not continued.

College Treasurer Ian Matthews advised the board at a meeting on 30 June 2010 that College should implement a new Treasury Management Policy to limit financial risk, stating that it was only in keeping with best international practise to expand its investment base.

The national media reported that Trinity is not the only institution considering putting such plans in place: University College Dublin and possibly other institutions are said to have similar strategies should the Government decide not to renew the guarantee scheme for a second time.

A College spokesperson said “Trinity College has introduced a new Treasury Management Policy in keeping with best practice to broaden its investment base to include international as well as Irish banks, with an increased emphasis on credit limits and ratings. “The new policy will address the issue of credit risk associated with deposits in a structured manner with greater emphasis on placing deposits based on international credit ratings from international credit rating agencies like Moody’s and Standard & Poor’s. Deposits maybe spread over a number of Irish and Irish branches of international banks.”

College will only withdraw its deposits from banks if the state guarantee scheme is withdrawn and international credit rating agencies downgrade the banks rating from an “A” grade.