Minutes of the Meeting of the Court of Directors held on 5 July 2024

1. Conflicts, Minutes and Matters Arising

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

The minutes of the meeting held on 22 May 2024 were approved.

The Chair welcomed Clare Lombardelli to first meeting of Court, since formally taking up the position of Deputy Governor for Monetary Policy.

The Chair set out that the next Court Away Day would be held in the second half of the year. Members thought the topic of payments would be a valuable focus for the meeting. The Chair also proposed to hold a meeting of Court at the Bank’s Leeds office in 2025, which was welcomed by Court.

The Chair noted that the Bank’s Annual Report and Accounts would be published as soon as possible, following the General Election. Alongside this, the Bank was due to publish its refreshed strategy for Data and Analytics. The Chair noted that he would – as previously agreed – be asked to approve this for publication in due course.

2. Governor’s Update

The Governor observed that the Court meeting took place shortly after the General Election in the UK. The Governor explained that there had been no discernible market reaction to the outcome of the General Election.

The Governor highlighted to Members of Court that a number of the Bank’s public appointments had been paused or delayed due to the General Election, in line with Cabinet Office Guidance.

The Governor noted that the Executive was assessing the Bank’s strategic priorities for the next three years, proposals for which would return to Court in due course. The Governor also highlighted progress in the development of the Bank’s new office in Leeds, which members of Court welcomed. Court members observed the importance of ensuring the Bank’s key committees, for instance Court, held meetings in Leeds.

3. Audit and Risk Committee (ARCo) Update

Jonathan Bewes updated Court on the most recent meeting of ARCo, held on 21 June 2024.

In the Audit section of the meeting, Jonathan Bewes informed Court that ARCo had commissioned a study in relation to the updated UK Corporate Governance Code, which would return to the sub-committee in the autumn. He added that ARCo would receive an update on the Finance Modernisation Programme at its October meeting.

Jonathan Bewes said that ARCo had been reassured that the Bank’s outgoing external auditors, KPMG, had found the Bank had made progress against issues identified the previous year. He said that the Bank’s new auditor, EY, was due to return to ARCo in October with its full audit plan and that transition arrangements between EY and KPMG were proceeding as planned.

Internal Audit had presented its annual report to ARCo, noting progress made to enhance the Bank’s controls environment.

In the Risk section of the meeting, ARCo received an update from the Chief Risk Officer.

ARCo received updates on the Bank’s approach to model governance, the 5-year capital review and the Bank’s new Non-Bank Financial Institutions lending tool. The Bank’s Chief Information Officer – Nathan Monk – and Head of Cyber – Jonathan Pagett – also updated ARCo on work underway in their respective areas.

4. Remuneration Committee (RemCo) Update

Diana Noble updated Court on the work of RemCo and topics discussed at its most recent meeting on 12 June 2024.

5. Nominations Committee (NomCo) – oral update

The Chair set out that NomCo met after the last meeting of Court, on 22 May 2024.

NomCo had approved an appointment to the Board of the Bank’s Pension Trustees.

NomCo had also been updated on the Bank’s skills and talent programme. NomCo agreed that good progress had been made with regards to the foundational elements of the programme.

6. Chief Operating Officer Update

Ben Stimson updated Court on key developments since its last meeting, including the launch of the Leeds Strategy and the Pensions Review.

Ben Stimson also highlighted progress in technology modernisation and IT infrastructure. He added that, regarding the modernisation of the Bank’s data processes and systems, progress was in line with expectation.

In response to a question from Tom Shropshire, Ben Stimson agreed that resource constraints were a consistent theme across the organisation. Ben Stimson was hopeful that the completion of the RTGS Renewal Programme would free up skills and capability to deploy to other areas. Ben Stimson said that the Bank’s capacity to respond to changing demands over time would be improved as a direct result of the work being undertaken by the Change and Planning area.

Ben Stimson informed Court that the RTGS Renewal Programme continued to make significant progress.

Enterprise Demilitarized Zone (DMZ) Programme

Court approved the DMZ Programme update, noting its foundational importance for the technology estate.

ISO 20022 Internal Readiness Programme

Court approved the Programme update, noting its close link to the RTGS Renewal Programme.

Court asked that the Bank’s executive directors do more to draw out the benefits and dependencies of programmes that require Court approval.

7. The Bank’s Finances

(Afua Kyei)

Afua Kyei updated Court on the Bank’s financial position, which was in line with forecasts.

Afua Kyei noted that the Bank would soon announce further details around the operation of the Bank Levy. Court supported the proposed approach to these communications.

8. 5-Year Review of the Bank’s Capital Parameters

(Vicky Saporta, Nick Butt, Aakash Mankodi and Stephen Brown)

Aakash Mankodi introduced the item. He noted the capital framework was a key component of the Bank’s overall financial framework agreed with HM Treasury in 2018 and its parameters were due for review every five years. This was the first of such reviews. He said the Bank felt the framework had operated effectively.

Jonathan Bewes noted that ARCo had discussed the topic at its last meeting and were content to endorse the proposals and recommendations.

Court approved the item.

9. Non-Bank Financial Institution Lending Tool

(Vicky Saporta, Nick Butt, Aakash Mankodi and Stephen Brown)

Nick Butt introduced the item, noting that the tool was designed to support core markets in periods of gilt market dysfunction.  The tool would be launched in two phases, with the first set to go live at the end of this year.  It was then intended to extend coverage across sectors and firms in the second phase of the rollout.  At this meeting, Court’s approval was sought to launch the first phase of the tool.

Nick Butt explained the tool had been designed to reinforce its policy purpose. For example, the tool was contingent – not to be used in normal times – and was market-wide, rather than bilateral.

It was noted that the Bank’s Risk Directorate, Executive Risk Committee and ARCo were content with the risk assessment of the first phase of the tool.

Jitesh Gadhia asked whether the tool could evolve over time. Sarah Breeden noted that it could for example include non-bank entities beyond insurance companies and pension funds, and choices had been made that did not constrain the Bank in assessing the parameters that would set any second phase of the tool.

Court approved the item.

10. Communications Six-Monthly Update

(James Bell and James Hotson)

James Bell introduced the item.

James Bell said polling indicators had improved, with sentiment improving in line with the fall in inflation.

James Hotson set out the Bank’s communications strategy.

Court expressed its support for the Bank’s communications strategy.

11. Court Review of Ethnic Diversity and Inclusion Update February 2024

(Jane Cathrall, Sarah Guerra and Peter Fashesin-Souza)

Sarah Guerra introduced the item, noting that progress had been made against the recommendations of the Court Review.

Diana Noble noted that the Bank had committed to refreshing the analysis underpinning the findings of the Review in 2025 and this update would provide an important foundation for that work.

The Chair summarised the discussion by noting that, while progress had been made following the Court Review, there was risk that it needed further momentum. He added that this would be discussed again by the Nominations Committee later this year.

12. Our Code

(Sebastian Walsh, Michael Salib and Alison Kavanagh)

Court was updated on revisions to the Bank’s “Our Code” booklet, which aimed to create a shorter document that would be easier for staff to engage with. The Secretary noted that one of the key changes was to organise Our Code explicitly around the Seven Principles of Public Life, known as the Nolan Principles. The Chair noted that Our Code would come for final approval at the September meeting.

Non-executive members of Court were supportive of the changes, commending the presenting team for both the new approach and the quality of communication.

Some members noted that it would remain important that all relevant policies were easily accessible through Our Code.

Diana Noble set out that the document explained clearly the expectations the Bank had of its staff, which was appropriate for Our Code. However, she noted that the Bank might consider a separate document that outlined its own commitments and obligations to its staff.

13. Committee Appointment and Conflicts Update

(Sebastian Walsh)

Court noted the paper and discussed future recruitments.

14. Papers for Information

Court noted:

• Monetary Policy Committee Report
• RTGS Programme Renewal Update
• Annual Report and Account Signing Committee Minutes 11 June 2024

The meeting of Court was closed.