Minutes of the Meeting of the Court of Directors held on 14 December 2023

1. Conflicts, Minutes and Matters Arising

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

The minutes of the meeting held on 31 October 2023 were approved.

The Chair welcomed Sarah Breeden to her first meeting of Court as Deputy Governor for Financial Stability.

Court expressed its thanks to Andrew Hauser, shortly to become Deputy Governor of the Reserve Bank of Australia, for his important contributions to the work of the Bank of England.

2. Governor’s Update

The Governor updated Court on the principal elements of the Bank’s Financial Stability Report, published on 6 December.

The Governor noted that the Bank had also, since the last Court meeting, released a hypothetical scenario for its system-wide exploratory scenario exercise, which would assess the behaviours of banks and non-bank financial institutions during stressed financial market conditions and how they might interact to amplify shock to markets core to UK financial stability.

The Governor added that the Bank had published a policy statement on Basel 3.1, noting the PRA was doing further work on the subject.

The Governor updated Court on a number of remuneration issues.

Court discussed priorities for the year ahead, noting that investment in technology and the pensions review should be important points of focus.

3. Nominations Committee (NomCo) Update

The Chair updated Court on the NomCo meeting of 31 October, which focussed on succession planning for the Bank’s most senior roles.

4. Audit and Risk Committee (ARCo) Update

Jonathan Bewes updated Court on the ARCo meeting of 22 November, where it has been updated on the progress of RTGS renewal and the five-year review of the Bank’s capital framework. It had also discussed the Bank’s risk register, its third-party suppliers and process risk within the organisation.

5. Remuneration Committee (RemCo) Update

Diana Noble updated Court on the work of RemCo.

Diana Noble noted that RemCo had been closely engaged on the development of the Pensions Review. RemCo had also approved salary reference points for executive directors, as well as agreeing remuneration for members of the new Financial Market Infrastructure Committee.

6. RTGS Renewal Programme

(Victoria Cleland, Nathan Monk and John Stocker)

• Value for Money

The Chair noted that an update on the value for money considerations around RTGS renewal had been requested by Court at a previous meeting.

John Stocker noted that Value for Money had been considered from the very early stages of RTGS renewal, and had a methodology aligned to that of the National Audit Office. Court commended the approach taken by RTGS Renewal as an example of high-quality project management for large scale programmes.

Victoria Cleland noted that work was on-going to explain the benefits renewal would bring to industry and key stakeholders, with an emphasis on ISO20022.

Anne Glover observed that it could be helpful to explain the benefits of our renewed RTGS in comparison to the functionality offered by other central banks.

In response to questions, Victoria Cleland noted that quality and scope of the build had been prioritised.

The Governor noted that the benefits of RTGS would be acknowledged in future, by enabling the Bank to encourage innovation and competition in the banking sector.  The Chair agreed, noting the relevance of the PRA’s new statutory objective to promote growth and competitiveness in this respect, as well as the Bank’s new secondary objective to facilitate innovation in the provision of Financial Market Infrastructure services.

• RTGS Renewal Programme Update

Victoria Cleland said that good progress had been made on TS3 since the previous Court meeting, particularly with regards commencing the testing by participants.

Internally, testing “model office” was underway. She noted that a key milestone would be whether Participant Acceptance Testing could begin as planned in January.

Frances O’Grady asked whether risks around staff retention had grown as the project approached its conclusion, as people looked for new roles. Victoria Cleland said that an approach had been agreed to help staff transition to other roles within the Bank after the project concluded.

The Chair thanked Victoria Cleland for the update.

7. COO Update

(Nathan Monk)

Ben Stimson updated the progress of CS2025 and the work of Central Services, highlighting progress in Technology and Data.

Ben Stimson also brought a number of programmes to Court for approval. He highlighted the Enterprise Integration Programme. Court discussed and approved the project, noting its foundational nature for the transformation of technology.

Court approved the data centre co-location services programme and Azure Cloud Platform Services programme, and the renewal of contract with LSEG/Refinitiv.

Court also discussed the renewal of the Bank’s energy contract. Court NEDs requested a short update on the costs and benefits of different, more flexible approaches to that outlined. Court also discussed the important intersection between this and the Bank’s property strategy.

Huw Pill joined Court to discuss renewal of FAME, a system which supports much of the Bank’s analytical work, including the MPC’s forecasting process. He said work was underway to scope and design a new modular system to support the Bank’s analytical areas in future. Court noted the budget was approximate at this stage, but gave its approval for the work to move forward given its critical importance to the Bank’s ability to acquit its responsibilities.

8. Technology Modernisation Update

(Nathan Monk and Pete Townsend)

The Chair welcomed Nathan Monk and Pete Townsend to the meeting, who provided Court with an update on the Technology Modernisation Programme.

Since September’s meeting, Nathan Monk and Pete Townsend had progressed a plan for sustained investment over the next five years. In particular, work regarding cloud and data centres had progressed at pace.

Court asked for the next update to include further detail on how other business areas would be involved in this Technology programme and how interdependencies were being considered. Members also asked for more detail on how the programme would be managed and governed, as well as its risk register.

9. Pension Review

(Jane Cathrall and Natasha Wilson)

Natasha Wilson updated Court on the pensions review.

Diana Noble gave Court members the perspective of RemCo on the review.

The Chair thanked Jane Cathrall and Natasha Wilson for their work to date on the Pensions Review.

10. IEO – next evaluation

(Melissa Davey and Michael Lever)

Melissa Davey informed Court that two areas had been identified for IEO reviews in 2024.

First, the IEO proposed to assess the PRA’s approach to secondary growth and competitiveness.

Second, the IEO planned to assess the Bank’s horizon scanning capabilities.

Court welcomed the proposals.

11. FPC Effectiveness Review 2023

(Sebastian Walsh)

The Chair noted that he had undertaken a regular effectiveness review of the FPC. The Committee was found to be functioning well, with good support from Bank staff.

Sarah Breeden said that, having been newly appointed as Deputy Governor for Financial Stability, she intended to take the opportunity to review the operation of the FPC and would update Court in due course.

12. De-redactions for Court Minutes published in 2021

(Sebastian Walsh)

Sebastian Walsh introduced the item. Court approved the proposed de‑redactions.

13. Committee Appointments and Conflicts

(Sebastian Walsh)

The Chair noted that good progress was being made with regards to the recruitment for the incoming Deputy Governor for Monetary Policy.

The Chair noted that Anne Glover and Ron Kalifa had been appointed to advise the Labour Party’s review of financial services. The Chair set out that appropriate mitigating actions had been pursued to guard against any potential or perceived conflicts of interest.

Court approved the proposed membership of the Financial Market Infrastructure Committee.

Court approved the appointment of Rebecca Jackson as the Executive Director for Authorisations, Regulatory Technology, and International Supervision.

14. Items for Information

Court noted:

• Monetary Policy Committee Report
• First annual public release of Warsh Review MPC meeting transcripts and papers January 2024
• Senior Managers Regime (SMR) – annual attestation
• MoU/SLA Annual Review

The meeting of Court was closed.