David Roberts, Chair
Andrew Bailey, Governor
Sir Jon Cunliffe, Deputy Governor – Financial Stability
Sir Dave Ramsden, Deputy Governor – Markets & Banking
Sam Woods, Deputy Governor – Prudential Regulation
Ben Stimson, Chief Operating Officer
1. Conflicts, Minutes and Matters Arising
There were no conflicts declared in relation to the present agenda.
The minutes of the meeting held on 8 February 2023 were approved.
The Chair noted that a number of steps had been introduced to support the effectiveness of Court meetings.
The Chair welcomed Ruth Smith to the meeting and noted that Ruth had been appointed as interim Secretary of the Bank.
2. Governor’s Update
The Governor updated Court on recent developments in the banking system.
The Governor reflected that recent weeks had seen two banks with UK operations fail and parts of the financial sector come under stress. Silicon Valley Bank (SVB) and its UK subsidiary failed on 10 March due to a deposit run following significant losses in the US parent. Court observed the speed of the run on SVB. Court noted the factors underlying this, including the extent to which social media now drives bank runs.
The PRA’s approach to the UK operations of SVB ensured a greater degree of financial resilience, particularly the subsidiarisation policy. Over the weekend that SVB UK failed, the Bank conducted a successful resolution transaction – demonstrating the effective operation of the UK’s resolution regime. SVB UK’s capital instruments were written down, and the firm was sold to HSBC. The Bank’s actions protected both depositors and public funds.
The Governor set out that the resolution plan for Credit Suisse was well-rehearsed by the UK, US and Swiss authorities. However, the Swiss authorities had not used the resolution plan. Instead, the Swiss conducted a going-concern sale underpinned by some public support, which in turn effected a full write-down of subordinated debt instruments, while equity was only partially written down. There had been some brief fallout in AT1 markets following this action, but swift communications from the UK and EU authorities on their approach to the creditor hierarchy in resolution had stemmed this.
Though SVB and Credit Suisse had failed for different reasons, the events had taken place in close proximity to each other. As a result of this, investors perceived that the outlook for the global banking sector was uncertain. The Governor noted that more broadly the backdrop for these events was an uncertain outlook for global economic activity. The Bank was monitoring the financial system closely, particularly the impact of recent events on financial markets, UK banks and economic conditions. The Governor noted that UK banks are well capitalised, liquid and resilient to continue supporting households and businesses.
Providing further detail about this work, Sam Woods explained that the FPC and the PRA had been closely examining developments across the financial system as a whole.
Members of Court reflected that a number of lessons could be learnt from recent events. The Bank’s directorates would be exploring these over the coming weeks and months.
The Governor noted the importance of the Bank and its international counterparts continuing to ensure and communicate that resolution plans for global systemically-important banks remained credible.
Jon Cunliffe noted that the Bank’s resolution communications demonstrated the importance of a swift, decisive, targeted approach in a stress event.
The Chair recognised that responding to recent events required colleagues from across the Bank to work tirelessly. Court thanked Bank staff for their hard work and dedication.
3. Audit and Risk Committee (ARCo) Update
Diana Noble updated Court on the work of ARCo. At its last meeting, ARCo had considered a number of matters including Finance Systems Modernisation, the Bank’s technology function and approach to obsolesce and cyber capabilities.
Diana Noble noted that ARCo were content with the progress that had been made in scoping and readying the business for the Finance Systems Modernisation Programme.
Diana Noble updated Court on the tender process that would appoint a new external Auditor for the Bank.
ARCo approved Internal Audit’s Annual plan.
4. Remuneration Committee (RemCo) Update
Anne Glover updated Court on the work of RemCo. Since Court’s last meeting, RemCo had met twice. First, to approve the remuneration for an Executive Director Appointment. Second, to discuss matters relating to pensions and objective setting.
Anne Glover noted that at the next meeting, Court would be asked to consider the Remuneration Report as part of the Bank’s Annual Report.
The Chair thanked members of the Committee for their continued support of RemCo’s work.
5. RTGS Renewal Programme Update
(Victoria Cleland, Sushil Saluja and John Stocker)
Victoria Cleland updated Court on the RTGS Renewal Programme.
Since the February Court meeting, the ECB had successfully migrated to the new payments messaging standard, ISO 20022. This was viewed as a major milestone in the Bank’s own RTGS Renewal Programme.
Victoria Cleland noted that the team continued to be focussed on testing TS2.1. This was a valuable exercise for shaping future processes and procedures for operating the renewed RTGS.
Court discussed the key risks to delivery of TS2.1. Victoria Cleland noted that there was contingency planning for a range of scenarios, and that the Programme remained on track.
Victoria Cleland noted that recruitment continued to be a challenge due to a tight external market. The positive impact that the next phase of RTGS Renewal – the build of TS3 - could have on staff retention and attraction was noted.
Court members asked about the readiness of Direct Participants. Victoria Cleland noted that all were making good progress.
It was observed that the TS3 build remained on track.
Court thanked those working on the RTGS Renewal Programme for their dedication and creative thinking, delivering a complex, key strategic priority for the Bank.
6. COO Update
(Sushil Saluja, Afua Kyei and Simon Davis)
Ben Stimson noted that CS2025 was progressing as expected, six months into a three-year programme.
Sabine Chalmers noted the importance of clear internal communications and effective business partners in supporting the successful delivery of the Programme.
- Finance Systems Modernisation Programme
Afua Kyei introduced the item. Court agreed that the Programme was a priority for the Bank. Court approved the item.
- Revised lifetime budget for ISO20022
Simon Davis introduced the item. Court approved the Programme.
7. Annual Report and Accounts Text
(James Bell, Jane Cathrall and Chris Peacock)
Members were asked to submit written comments on the draft; the Annual Report would come to Court for approval in May.
It was noted that Court’s views were being sought as to whether this part of the Annual Report was fair, balanced and understandable.
Court thanked the presenters for their efforts in formulating the Annual Report.
8. Six-Month Risk Report
Stephen Brown introduced the six-month risk report.
Two banks with UK operations had failed in recent weeks. It was noted that colleagues had worked tirelessly to respond to this. As a result, staff stretch and operational risk was elevated. It was anticipated that this would return to normal levels in short order, assuming no further significant external shocks.
Court approved the Annual Risk and Control Attestation. Diana Noble noted that this had been discussed at a recent ARCo meeting, where the Committee thought that the process was bedding down well.
9. Committee Appointments and Conflicts Update
Court noted the paper.
10. Enforcement Decision Making Committee (EDMC) Procedures
(Oliver Dearie and Duncan Cromarty)
Court was asked to approve changes to the procedures to the EDMC. Notably, Court was asked to opine on the length of terms of EDMC Members. Changes to tenures had been proposed to ensure that knowledge was able to be transferred as EDMC Members completed their terms.
Court opined on whether the length of terms had been structured appropriately. Some members of Court thought that an eight-year tenure may be optimal, as it allowed for rotation on the Committee.
Court approved the proposed changes to the procedures of the EDMC. Court was content for management discretion to be applied when opining on the precise structure of the tenures for EDMC Members.
11. Financial Stability Strategy
(Sarah Breeden and Sana Siddique)
The Chair thanked Sarah Breeden and colleagues for producing the Financial Stability Strategy. Court had delegated to the FPC the function of determining the Bank’s Financial Stability Strategy under S9A of the Bank of England Act 1998.
The Chair noted the importance of ensuring that the Financial Stability Strategy struck the right balance between leaning into innovation and maintaining robust regulation.
Non-Executive members of Court thought that the Financial Stability Strategy was appropriate and well considered.
Court was content with the strategy and, subject to consultation with HM Treasury, agreed that it should be published.
12. Items for Information
- Monetary Policy Committee Report
- The Bank’s Finances – Emerging 2022/23 financial results
- Houblon Norman George Fund Accounts
The meeting of Court was closed.