The British Business Bank’s Board and Board Committees each have their own terms of reference. The terms of reference for each of our Committees can be found on our website and are reviewed annually.
The Bank has a number of Executive Committees including Investment Committees for each subsidiary and the Product Development Committee each of which consists of various members of the Bank’s senior management together with Board members when it is required for particular investment decisions.
The Board, the Board Committees, and the Executive Committees have been structured to provide a strong governance framework. The Board Committees and Investment Committees each have Terms of Reference which set out respective duties and responsibilities. All appointments to the Board, the Board Committees and the Executive Committees are based on the diversity of contribution, experience and required skills, irrespective of gender, race or any other irrelevant criteria.
The Board is committed to ensure the diversity of its membership. All appointments to the Board are based on merit and on the experience and skills required, with due regard to the benefits of diversity.
The Board has a number of committees, all of which are governed by the principles and remit set out in the UK Corporate Governance Code and whose terms of reference can be found on the British Business Bank website.
The Board of Directors of the Bank has been set up along with Board-level committees, notably Risk, Audit, Remuneration and Nomination. To ensure robust and effective decision-making within the Group structure the British Business Bank Board has approved terms of reference for each committee.
Audit Committee Report
Under the chairmanship of Jonathan Britton, the other members of the committee during the year were Teresa Graham, Caroline Green and Neeta Atkar, who are all independent Non-executive Directors. The Chief Executive officer, Chief Finance Officer, Chief Risk Officer, General Counsel and Head of Internal Audit attend Committee meetings along with the external auditors who are invited to attend and report at all meetings. The committee also meets privately with both internal and external audit. The Committee met six times during the year in May 2016, June 2016, July 2016, September 2016, December 2016 and March 2017. Attendance can be found on page 53 of the Annual Report PDF.
The Committee’s role is to review, monitor and make recommendations to the Board relating to the going-concern nature of the Bank, the integrity of financial reporting, the financial statements and any issues and judgements they contain, the adequacy and effectiveness of the internal and external controls and overseeing the relationship with the Bank’s external auditor. The committee also has oversight of the internal audit and audit planning process of the Bank.
During the financial year 2016/17, the Audit Committee considered and approved the following matters:
In relation to financial statements:
- The oversight of the Bank’s financial reporting process and the process for preparation of the consolidated accounts.
- Reviewed the accounting policies adopted to ensure the Bank as a whole complies with the applicable accounting standards and presents consolidated accounts that are true and fair.
- Accounting treatment for investments and impairments and critical accounting judgements
- The process for preparing the consolidated accounts.
- IFRS 9 accounting implications.
- Group and subsidiary audit exemptions.
In relation to internal and external audit:
Appointment of external auditors.
Review of external audit planning and progress.
External audit management letter.
Approval of the internal audit plan and review of progress against this plan.
Reviewed the Head of Internal Audit’s annual report and opinion.
In relation to governance and other matters:
Assurance mapping and whistleblowing policy.
The migration of accounting and outsourcing arrangement that the Bank receives from UKSBS to another provider.
Approval of amendments to its Terms of Reference.
Accounting treatment of the proposed SULCo transaction and review of accounting policies.
As required by the Shareholder Relationship Framework Document, the Bank is audited by the Comptroller and Auditor General. The National Audit Office carries out the external audit for and on behalf of the Comptroller and Auditor General. The external auditors have not conducted any non-audit services during the financial year and the committee considers that the external auditor is both objective and independent.
The significant issues considered by the committee, with input from the External Auditor, during the year included methodologies and procedures for determining asset valuations and provisions, significant accounting policies, decisions and judgments, the contents of the Annual Report and Accounts of the Company and the financial and accounting aspects of the combination with SULCo.
External audit brought four matters to the Audit Committees attention in their 2015/16 management letter.
Documenting decisions around accounting treatment.
The approach to the unwinding of the ECF impairment.
Issues with the accounts production process.
All of these issues were addressed and their resolution discussed and agreed by the committee.
As part of an overall Board evaluation, the effectiveness of the committee was assessed. The evaluation determined that the committee was operating effectively, but suggested some small improvements that could be made.
The Remuneration Committee operated under the chairmanship of the Senior Independent Director, Christina McComb until she became the interim Chair of the Board in October 2016 at which point Teresa Graham was appointed as the interim Chair of the Remuneration Committee. The Remuneration Committee also comprised the Chair, Ron Emerson until he stepped down on 30 September 2016, and Ceri Smith. The committee met six times during the year in April 2016, June 2016, September 2016, November 2016, February 2017 and March 2017. Attendance can be found on page 53 of the Annual Report PDF.
The committee’s role is to set the remuneration policy for all Executive Directors, the Chair and all other senior management, including pension rights and any compensation payments. It also sets the terms of the Long and Short-Term Incentive Plans and any incentive schemes the British Business Bank plc and its subsidiaries may operate in accordance with the parameters of the Shareholder Relationship Framework Document.
During the financial year 2016/17, the Remuneration Committee considered the objective setting and structure of all compensation payments to Directors and senior management, the administration of the Long and Short-Term Incentive Plans of the Bank, review of market benchmarks for remuneration, the performance evaluation of senior management, approval of a private healthcare proposal, the introduction of a cash allowance in lieu of pension for employees who have reached their lifetime pension allowance, review of its Terms of Reference and employment and remuneration issues related to the SULCo transaction.
The Risk Committee operated under the chairmanship of Teresa Graham in an interim capacity until the appointment of Neeta Atkar as the new Chair of the Risk Committee on 1 July 2016. Following the May meeting Teresa Graham stepped down from the Risk Committee. The Risk Committee also comprises independent Non-executive Directors, Christina McComb, Colin Glass, and Jonathan Britton and the Shareholder Director Ceri Smith. The Chief Executive, Chief Finance Officer, Chief Risk Officer, General Counsel and Head of Internal Audit also attend committee meetings. The committee met four times during the year in May 2016, September 2016, December 2016 and February 2017. Attendance can be found on page 53 of the Annual Report PDF.
The Risk Committee advises the Board on the company’s overall risk appetite and strategy, reviewing performance against risk, the strategic risk register and other management information relating to the risks facing the group. It reviews and approves the Bank’s Risk Management Framework and satisfies itself that the framework is efficient and effective relative to the Bank’s activities and risk profile.
During the financial year 2016/17, the Risk Committee considered and approved the following matters:
- Reviewed the assessment of the Risk Management Framework and recommended the updated version for approval to the Board.
- Considered our risk appetite quantification, and the outputs of macroeconomic stress tests on our portfolio and business plan.
- Reviewed qualitative and quantitative analysis of the various programme portfolios.
- Approved the Operational Risk Management Framework, Change Management Framework and Business Continuity Plan.
- Reviewed and approved policies on Model Governance, Credit and Investment Risk, Market Abuse and Insider Dealing, Information Security and Reputational Risk.
- Assessed our position in relation to State aid.
- Assessed the impact of market risk on the portfolio.
- Reviewed the Cyber Risk Roadmap and Information Strategy.
- Reviewed the risks associated and the assurance work undertaken in relation to the SULCo transaction.
The Nomination Committee operated under the chairmanship of Ron Emerson until his resignation on 30 September 2016 and from 1 October 2016 under the interim chairmanship of Christina McComb. Ceri Smith is also a member of the committee. From January 2017 Teresa Graham was appointed as an interim member.
The committee met during May 2016 and January 2017 and attendance details can be found on page 53 of the Annual Report PDF. At the committee meeting, nominations of potential Directors were considered and recommended to the Board.
During the financial year 2016/17, the committee discussed succession planning for Executive Directors and senior management, appointment of further Non-executive Directors to the Board, re-appointment of existing directors, membership of the Audit, Risk and Remuneration Committees, review of its Terms of Reference, and undertaking an external evaluation of the Board and Audit and Risk Committees.
The Shareholder Relationship Framework Document provides that no appointment or removal of a director of the Company or appointment or removal of any such director to or from an executive position, can be made without the prior written consent of the Shareholder and appropriate consents to each directorship were obtained from the Shareholder.
The appointment of the Chair is a shareholder appointment, as such it was not appropriate to have a Nominations Committee process for the appointment.
In addition, during 2016/17 Board committees were established to discuss the following adhoc matters:
- The identification of new premises in Sheffield and additional space in London;
- All matters related to the proposed transaction with the Start Up Loans Company (“SULCo”); and
- The role being performed by the Bank on the Northern Powerhouse Investment Fund and the Midlands Engine Investment Fund.
An existing Board Sub-Committee relating to the advice being provided to HM Treasury on finance platforms and credit reference agencies continued to meet during 2016/17.
Board and committee attendance
The table opposite sets out the attendance of Directors since 1 April 2016 who attended each Board and committee: