Oldham Council has twenty two Lender Option Borrower Option (LOBOs) long-term loan contracts on its books that until paid will pose a serious threat to the boroughs future finances. During the “noughties” both UK Council and Housing Association social housing providers found it difficult to access finance and as a result fixed rate LOBOs became lenders primary preference for social housing loan agreements and were heavily upsold by lenders. The problem with LOBOs, typically fifty year loan agreements, is that the lender has the option to call on the facilities of the loan at pre-determined dates and can impose a new fixed rate for the remaining term of the loan agreement at these dates and this can be any rate they choose which can leave the only option to be repayment of the loan in full. Oldham Council entered into these LOBO agreements over a seven year period 2002 – 2008 with five financial institutions during which time the Labour Party was in complete control of the Council for five of these years. The five financial institutions are: Dexia Credit Local (France). FMS Wertmanagement AöR (Germany). Danske Bank (Denmark). KA Finanz AG (Austria). Barclays. KBC Bank NV (Belgium). Oldham Council refuse to disclose the amounts, longevity and terms of these contracts.
