Minutes of the Meeting of the Court of Directors held on 9 February 2022

1. Court Evaluation Survey: Results and Recommendations

(Julia Budd and Laura Sanderson from Russell Reynolds)

Julia Budd and Laura Sanderson summarised the findings from their Review. It was clear that the Court functioned well as a public sector corporate board, with a high level of engagement from executive and non-executive members and effective chairmanship.

2. Secretary Appointment

(Jane Cathrall)

Court approved the appointment of Sebastian Walsh as Secretary of the Bank.

3. Minutes and Matters Arising

The minutes of the meeting held on 2 December 2021 were approved.

There were no conflicts declared in relation to the present agenda.

Court was updated on public appointments process for the Chair of Court and Non-Executive Director positions.

Dave Ramsden updated Court on the Bank’s funding model. HMT had published a consultation paper on funding via a new levy on those financial institutions that currently pay into the CRD scheme. The Chair noted that Court would return to this to agree its preferences.

The Chair welcomed Ben Stimson to his first Court meeting as Chief Operating Officer. The Chair asked Mr Stimson to update Court on his initial thoughts on his strategy for Central Services Transformation and the Bank’s new ways of working at the April meeting.

4. Women in the Bank

(Tess Kelly, Andrew Hauser, Christina Segal-Knowles and Kayleigh Guinan)

Tess Kelly updated Court on the work of the Women in the Bank network. The network had continued projects in a number of areas, including work on barriers to progression and solutions to reduce them and work with People and Culture on the setting of the Bank’s gender targets. They had also continued to run many events for their members, and developed new forms of communications. The network recognised progress being made in the Bank through, for example, more Executive accountability for diversity and inclusion (D&I).

Court members commended the impressive work of the network. It was important that they continued to highlight the issues, but it was not their responsibility to deliver change. The increase in central resources for D&I was crucial here.

Frances O’Grady noted that it was important to think about the impact of new ways of working on women’s progression.

5. RemCo Update

Dido Harding provided an update on RemCo’s most recent meeting. They had agreed the annual remuneration changes for the Governors and remuneration and performance awards for the Executive Directors. They had agreed the pension opt-out rates for the coming year and continued the freeze on flex rates. They had also agreed to review Executive Director objectives for the year.

6. ARCo Update

Dorothy Thompson updated on the January ARCo meeting. The DCMP project was progressing with some systems transferred to the new data centre, but the more strategic and complicated systems still to transfer. Protection had been put around the project, with any decision to go ahead to be taken at the Deputy Governor level: those decisions would lie with Ben Stimson, unless there was a Markets or Banking systems impact, in which case Dave Ramsden would make the decision. ARCo had also received its regular update on progress on D&I: there was momentum, and more work was probably needed before progress could be gauged. The Bank had run a CBEST cyber-security test on itself, which had been a useful exercise. There were ongoing improvements being made but there had been good protection of the Bank’s outer perimeter.

7. PRA Strategy 2022/23

(Alex Barnett, Andy Batley, Sheila Omaboe, Anna Sweeney and Ivar van Hasselt)

Under the Financial Services and Markets Act (2020), Court is consulted on the PRA’s strategy annually. The PRA had launched a new strategy, agreed with the Prudential Regulation Committee, in 2021. It focussed on two key pillars. In the short term, there was an aim to become more flexible and responsive to emerging risks. Beyond this, there was a need to transform the PRA’s use of data and technology and make the shift from regulation being decided at European level to the UK taking on that responsibility following the UK’s exit from the European Union. Changes had been made to the structure of Directorates to help achieve those aims.

It was noted that the shift to being a rule maker represented a fundamental shift in the PRA’s role. That came with new challenges, and a greater degree of accountability. It also required some change in the skills required within the PRA, which was being addressed through a recruitment campaign.

Ron Kalifa noted the challenges in ensuring the PRA was at the forefront of identifying new and emerging risks given the significant changes to come in the financial services industry. Anna Sweeney responded that the PRA used a wide range of sources from its own and broader Bank contacts, but agreed that this was a continual challenge.

Court confirmed that it was content with the strategy.

8. RTGS Update

(Victoria Cleland, Oliver Tweedie, Stephen Brown, Mahesh Dubey and Nathan Monk)

Victoria Cleland updated Court on the Real Time Gross Settlement (RTGS) project. In October, Court had been updated on the significant progress that had been made in building the new RTGS platform. Since then a revised timetable for the implementation of the RTGS Renewal Programme had been announced, following agreement with the Governors in January. The new timetable followed a review in late 2021, incorporating feedback from CHAPS Direct Participants. It considered a range of factors covering both known and emerging risks, dependencies with other global implementations of ISO 20022 messaging, and against a backdrop of continuing uncertainty about the future path of the pandemic. The new timeline maintains the move to enhanced ISO 20022 messaging in spring 2023, but instead of a two-stage process with the first stage in June 2022 and the second stage in February 2023, it will now be undertaken in a single stage in April 2023. This had been communicated to the industry.

9. Communications

(James Bell and Sebastian Walsh)

James Bell set out his strategy for Bank’s communications. There was a desire to have an approach to communications based around the Bank’s new strategic priorities. The Bank also wanted to broaden its audience base. A lot had been done around outreach. The next step was to use that to deliver communications. Communications would come to Court twice a year to report on progress.

Ron Kalifa said that it would be helpful to see an engagement plan and understand where the Bank perceives the risks to be and the areas it is prioritising. The Chair asked Communications Directorate to return to Court with the new communications strategy.

10. The Bank’s Finances

(Afua Kyei, Paul McArdle and Jane Tucker)

(a) Court final review of 22/23 budget

(b) Financial Review December YTD 21/22, including Payment in Lieu of Dividend

Afua Kyei noted that the current forecast for 2021/22 was an underspend of £11.5m on total costs. The Bank would be transitioning to an annual budget and a three-year strategy. The 2022/23 Budget had therefore been informed by the emerging business plans for each of the Bank’s Strategic Priorities for the next three years and the three-year investment plan. The Budget was based on flat real increases and scope changes, with total costs of £760mn, 5% above the 2021/22 Budget.

In terms of the latter years of the plan, there was still work to do on the right weighting of Business As Usual (BAU), Strategic Priorities and Investment. But the tensions were helping Finance to have strategic conversations with business areas.

Andrew Bailey said that the three-year plan had been helpful in reconciling competing priorities.

Dorothy Thompson and Ron Kalifa agreed that there was work to do in the latter years of the plan to tie down the relative weighting of BAU, Strategic Priorities and Investment.

Dorothy Thompson noted the importance of tracking spending on the Strategic Priorities. Afua Kyei said that finance were discussing how to operationalise this with the business COOs.

Court approved the Budget for 2022/23. Court also approved the decision to make no payment in Lieu of Dividend.

11. Committee Appointments and Conflicts

(Melissa Davey)

Melissa Davey noted that Dame Collette Bowe had been reappointed to the FPC. She informed Court that processes were in train for replacements for Norval Bryson on the PRC and Michael Saunders on the MPC. HMT would soon be launching the process to replace Anil Kashyap on the FPC, when his second term ended in September 2022.

12. Papers for Information

Court noted:

• Annual Salary Review outcomes
• Monetary Policy Report
• 12 month forward planner

The meeting of Court was closed.