Report Prepared by: Kuljit Singh, Deputy Finance Officer, Finance Department
Title
SUBJECT: Approval of a Custodial Agreement with Principal Bank to Provide Institutional Securities Custody Services for a Three (3) Years, with Two Additional One (1) Year Terms for a Total up to Five (5) Years for an Annual Amount not to Exceed $15,000
REPORT IN BRIEF
Considers approving a Custodial Agreement with Principal Bank to provide Institutional Securities Custody Services for a three (3) Year, with two additional (1) year terms for a total of up to 5 years in an amount not to exceed $15,000 annually.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving a Custodial Agreement with Principal Bank to provide Institutional Securities Custody Services for three (3) Years, with two additional (1) year terms, total up to 5 years terms for an amount not to exceed $15,000 annually; and,
B. Authorizing the City Manager to execute the necessary documents.
Body
ALTERNATIVES
1. Approve a New Agreement, as recommended by staff; or,
2. Approve, subject to modification(s); or,
3. Deny; or,
4. Continue to a future City Council meeting.
AUTHORITY
Charter of the City of Merced Section 200.
CITY COUNCIL PRIORITIES
As provided for in the 2024-2025 Adopted Budget.
DISCUSSION
Investment custodian banks, or simply custodians, play a crucial role by safeguarding and managing assets on behalf of the City of Merced. Some of the primary tasks of an investment custodian bank includes, safekeeping of assets, settlement of trades, record keeping, income collection, compliance, and regulatory reporting ensuring that margin requirements are met and counterparty risk is mitigated.
In 2015, the City of Merced selected Bank of the West as its investment custodian through a competitive Request for Proposal (RFP) process. However, in 2023, Bank of the West was acquired by the Bank of Montreal (BMO), which subsequently became the new custodian of the City's investments. Currently, B...
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