Minutes of the Meeting of the Court of Directors held on 31 October 2023

The Bank's Court of Directors acts as a unitary board, setting the organisation's strategy and budget and taking key decisions on resourcing and appointments. Required to meet a minimum seven times per year, it has five executive members from the Bank and up to nine non-executive members.

David Roberts, Chair

Andrew Bailey, Governor

Ben Broadbent, Monetary Policy

Sir Jon Cunliffe, Deputy Governor – Financial Stability

Sir Dave Ramsden, Deputy Governor – Markets & Banking (to item 10)

Sam Woods, Deputy Governor – Prudential Regulation

Jonathan Bewes

Sabine Chalmers (from item 7)

Lord Jitesh Gadhia

Anne Glover

Sir Ron Kalifa

Diana Noble

Frances O’Grady

Tom Shropshire

In attendance:

Ben Stimson, Chief Operating Officer

Sarah Breeden, Deputy Governor – Financial Stability (incoming)

Secretary:

Sebastian Walsh

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 September 2023 were approved.

Sebastian Walsh said that, in response to Court’s request, the Technology Directorate had supplied Terms of Reference for the new Technology Advisory Panel for information.

The Chair welcomed Sarah Breeden, to her first meeting of Court.

Court thanked Jon Cunliffe for his services to the Bank and the country.

The Chair noted that Terms of Reference for the Enforcement Decision Making Committee (EDMC) had now been submitted to Court for information, following discussion of the draft document in May 2023. As no changes had been made in the intervening period, Court approved the Terms of Reference for the EDMC.

2. Governor’s Update

The Governor noted that the Forecasting Review, led by Ben Bernanke, was making good progress. Dr Bernanke had observed the latest round of MPC meetings as part of the review process.

The Governor updated Court on the latest economic developments, setting out that long-term government bond yields had increased across advanced economies. Growth had been stronger than expected in the United States and underlying inflationary pressures in advanced economies had remained elevated. Following events in the Middle East, the oil futures curve had risen somewhat while gas futures prices are little changed.

The Governor also noted that the uncertainties surrounding the Labour Force Survey had underlined the importance of the MPC’s practice of considering the widest possible range of economic indicators.

3. Audit and Risk Committee (ARCo) Update

Diana Noble updated Court on the work of ARCo.

At its 27 September meeting, ARCo received its regular report from the Chief Risk Officer and considered possible implications for the Bank’s risk profile in the event it moved forward with the development of CBDC.

The Chair thanked Diana Noble for leadership of ARCo over the past year. He thanked Jonathan Bewes for agreeing to take over as chair of ARCo from its next meeting on 22 November 2023.

4. Appointment of the Bank’s External Auditor

(Ed Moore and Matt Cartledge)

Matt Cartledge updated Court on the process to choose the Bank’s next external auditor.

Reflecting on the process, Court discussed the overall environment and level of competition in the audit market for banks.

Court thanked colleagues in Finance and Procurement for their support to this process.

5. Remuneration Committee (RemCo) Update

Anne Glover updated Court on the work of RemCo.

At its 3 October meeting, RemCo approved a revised policy governing pay for acting Executive Directors. RemCo also received an update on the Pensions Review.

At its 18 October meeting, Remco approved the remuneration for the Bank’s new Executive Directors for Technology, International, and Financial Stability Strategy and Risk.

6. RTGS Renewal Programme update

(Victoria Cleland, Nathan Monk, John Stocker, Mike Jones and Andrew Smith)

  1. RTGS Outage Review

Andrew Smith (Internal Audit) set out that during the start of day process for RTGS on Monday 14 August 2023 the operating team identified that the payments gateway software for RTGS could not connect to SWIFT to exchange messages. This prevented RTGS and CHAPS opening for settlement. Given the seriousness of this incident and the importance that the Bank places on learning lessons for the future, the RTGS/CHAPS Board had commissioned a review to complement its standard post incident process. This review had been carried out by the Bank’s Internal Audit function.

The review highlighted two technical themes in its review. The first related to revalidating controls around the monitoring of the availability and integrity of key components. The second relates to enhanced management of, and engagement with, third-party suppliers during the course of an outage.

Court agreed that the incident had been managed effectively and the teams involved from RTGS and Technology had worked well together, demonstrating lessons learned since the RTGS outage in 2014.

  1. RTGS Renewal Update

Victoria Cleland updated Court on the status of the Programme, focussing on timelines around the implementation of TS3. Victoria Cleland noted there were challenges around both the preparations to enable Direct Participants to use the testing environment and pressures on staff.

A paper provided by the RTGS Renewal Programme on lessons learnt from TS2.1 was noted for information.

7. COO Update

Ben Stimson said that good progress was being made with regards to CS2025. He said he was pleased to note that a new senior leadership team was in place in Central Services and work regarding technology modernisation and the Bank’s data strategy was continuing at pace. He added that the People Directorate was also advancing a number of important initiatives, including the Bank’s employee value proposition.

Ben Stimson updated Court on the Annual Salary Review negotiations with the Union.

In response to questions, Ben Stimson discussed the Bank’s approach to its current requirements around office attendance.

Ben Stimson turned to the most recent staff survey (Viewpoint), run in September. Initial analysis indicated a small improvement in overall sentiment.

8. Q2 Quarterly Finance Report and 2024/25 Budget Update

(Ed Moore and Kristy Eden-Green)

Interim Chief Financial Officer, Ed Moore, and Kristy Eden-Green updated Court on the Bank’s Finances and Budget.

Ed Moore said Court would be updated on the Bank’s business plans at a forthcoming meeting.

Ed Moore also updated Court on upcoming changes to the means by which the Bank funds its activities, moving from the Cash Ratio Deposit scheme to a new Bank of England Levy, as outlined in the Financial Services and Markets Act. Court noted the importance of this change for the ability of the Bank to fund execution of its full range of responsibilities in future.

9. Six-monthly Risk Update

(Stephen Brown and Rebecca Estrada-Pintel)

Stephen Brown presented his six-monthly risk update to Court, focussing on non-financial risks. He highlighted risks associated to technology obsolescence and the recent outage of RTGS, as well as risks stemming from geopolitical developments.

Rebecca Estrada-Pintel updated Court on financial risks to the Bank.

With regards to the Bank’s market operations, Court observed that the lending made under TFSME was due to be repaid.

10. Cyber Security Strategy

(Jono Pagett, Eloise Hindes)

Jono Pagett presented the Cyber Security Strategy to Court. He outlined how it would maintain and build on the maturity of the Cyber Security function, while responding to a changing threat landscape and expanding technology estate.

Court supported and endorsed the Cyber Security Strategy. It was noted that the Cyber Security Strategy would return to Court when further analysis of the cost had been undertaken, should the forecast spend be over £10mn or the scope of the Strategy change significantly.

11. Court Review of Ethnic Diversity and Inclusion and Gender Equality Update 2023

(Jane Cathrall, Sarah Guerra, Ragveer Brar and Katie Farrant)

Sarah Guerra updated Court on progress on delivering the recommendations of the Court Review of Ethnic Diversity and Inclusion, and gave the Gender Equality Update.

Court noted the impact that the Review had across the Bank, enabling open conversations and better understanding of the challenges the Bank must overcome.

Court agreed that diversity targets were helpful, though they could be further embedded into processes to ensure that individuals were supported earlier in their careers. Whilst it was important to keep the focus on executing the court action plan, the team were encouraged to explore where this would also benefit other protected characteristics and generally contribute to a more inclusive Bank.

The Chair asked that NomCo be updated on the Bank’s Gender Action Plan by April 2024.

The Chair observed that a theme common to both the update on Ethnic Diversity and Gender Equality was the consistency and skill levels of people managers. Work was being undertaken to address this, and improve the performance of people managers.

Court agreed that the Court Review should be tabled for discussion at Court annually, providing a high-level overview of how the Bank is performing.

Court thanked the presenting team for their continued work to ensure that the Bank is a diverse and inclusive employer and noted the importance of that on the Bank’s ability to fulfil its objectives.

12. Approval of arrangements for FMIC

(Sasha Mills and Sarah Parkinson)

The Terms of Reference for the new Financial Market Infrastructure Committee (FMIC) were presented to Court. The FMIC was due to be placed on a Statutory footing by the end of the year. As such, Court would become responsible for approving its operating procedures – and be responsible for reviewing its effectiveness, in the same way as for the MPC, FPC and PRC.

In response to questions from non-executive members of Court, Sasha Mills noted that the FMIC would have rule-making powers as a result of legislative changes, which underpinned the need for greater accountability relative to FMI Board it replaced.

Court agreed to approve the membership of the Committee via Written Procedure.

Court approved the Terms of Reference.

13. Conflicts of Interest policies

(Sebastian Walsh, Michael Salib and Alison Kavanagh)

Michael Salib presented the Bank’s conflicts of interest policies for their annual review, alongside the statutory conflicts codes for the Bank’s policy committees.

Court welcomed the revisions.

Court approved the revisions to statutory conflicts codes and agreed that they could be shared with HMT for consultation.

Court delegated to the Chair the authority to approve the revisions to the non-statutory conflicts codes.

Court approved the conflicts of interests policies as set out in Our Code.

14. PRC Effectiveness Review 2023

(Michael Salib)

The Chair said that he had undertaken a regular effectiveness review of the PRC, supported by the Deputy Secretary, Michael Salib. The review concluded that the PRC was functioning well and effectively, PRC felt well supported by the Secretariat and Bank staff.

15. Committee Appointments and Conflicts update

(Sebastian Walsh)

Court noted the paper and discussed future recruitments.

David Roberts noted that applications for the role of Deputy Governor for Monetary Policy were due to close on 6 November.

Sebastian Walsh noted for the record that Court had approved, by written procedure, the appointment of Nathan Monk as CIO, Nathanael Benjamin as Executive Director for FSSR. Court had also approved, in same manner, the promotion of James Talbot Executive Director for International, becoming responsible for the Bank’s Climate work in addition to his existing responsibilities.

16. Items for Information

Court noted:

  • Monetary Policy Committee Report
  • Enforcement Decisions Making Committee Procedures
  • Publication of the Bank’s Discussion Paper on the proposed regulatory regime for systemic payment systems using stablecoins, as part of a cross-authority package.

The meeting of Court was closed.

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