was retiring from LBG and was succeeded by Emma Lawrence on 7 June 2021 who is employed by LBG as Customer Management Director of
the Retail Bank.
The Nomination and Governance Committee continues to keep under review, on an ongoing basis, the structure, size and composition of the
Board and its committees, making recommendations to the Board as appropriate. Consideration is given to the need to ensure the appropriate
mix of knowledge, skills and experience, and diversity.
The Board has adopted the LBG Board Diversity Policy and LBG Board Diversity Objectives as applicable to the Bank and reflecting the relative
size of the Board. The Board has continued its commitment to maintaining at least two female board members so long as the board size is eight
directors. Following the appointment of Eve A Henrikson in 2020, the board size increased to nine directors and with the appointment of
Julienne C Daglish (to succeed Christopher J K Edis) and Emma L Lawrence (to succeed Letitia M Smith) the number of female directors has
increased to four. Further, the Board supports the overall aspirations of the new FTSE Women Leaders Review, which has replaced the
Hampton Alexander review and Parker Review goals reflecting that the Bank is a subsidiary and not a listed entity. The Board has made
progress on its diversity policy aspirations with Black, Asian or Minority Ethnic representation of 11% at the year end. The Board will continue to
take opportunities to increase ethnic diversity and the number of female board members over time where this is consistent with other skills and
diversity requirements and is proportionate to the size of the Board and the Bank.
Reflecting the size and complexity of the business, the Board has established a committee structure comprising a Board Risk Committee, Audit
Committee, Remuneration Committee and Nomination and Governance Committee (Committees). The Committees make recommendations to
the Board on matters delegated to them, in particular in relation to internal control, risk, financial reporting and remuneration matters. Each
Committee has written terms of reference setting out its delegated responsibilities and comprises independent Non-Executive Directors with
appropriate skills and experiences and chaired by an experienced Chair. The Committee Chairs report to the Board at each Board meeting.
The Board undertakes an annual review of its effectiveness, which provides an opportunity to consider ways of identifying greater efficiencies,
ways to maximise strengths and highlights areas of further development. During the year under review, Nomination and Governance
Committee provided oversight of an internal review, conducted by the Company Secretary, of the effectiveness of the Board, its committees
and the individual directors having commissioned an external review during 2020. The internal review process included a confidential open-
ended questionnaire to the Board and Committees, a confidential Chair and peer review and a short pulse survey seeking views of the senior
executive population providing an holistic review of performance. The internal evaluation included an appraisal of each director and Lord
Lupton, as Chair. The Senior Independent Director led the appraisal of the Bank’s Chair.
The internal evaluation concluded that the Board oversees the management of the Group effectively and has the appropriate skills and
expertise to protect the interests of all stakeholders. Its directors benefit from diverse but complementary skills and experience in financial
markets and institutions, technology and consumer-facing businesses in the UK and overseas, and all make valuable contributions to the Board.
While the evaluation did not highlight any material weaknesses or concerns, it identified some areas of focus in the future, including: (1) finding
more time on the Board agenda for open discussion of strategy/ forward-looking issues; (2) LBCM and LBG collaboration and relationships; (3)
enhancing Board reporting and papers; and (4) technical training for directors in such areas as crypto currency and sustainability. The Board was
pleased with the progress against the actions from the 2020 review.
The internal Board evaluation also considered the activities of the Audit, the Board Risk, the Nomination and Governance, and Remuneration
Committees. It concluded that the Committees were operating effectively, with the right balance of membership, experience and skills.
Principle Three – Director Responsibilities
The Board has established and maintains corporate governance practices that provide clear lines of accountability and responsibility to support
effective decision-making through the Corporate Governance Framework. This also helps clarify the relationship between the Bank and its
parent company in order to deliver long-term sustainable success. Policies are also in place in relation to potential conflicts of interest which
may arise. All Directors have access to the services of the Company Secretary, and independent professional advice is available to the Directors
at the expense of LBG, where they judge it necessary to discharge their duties as directors.
The Board is supported by its committees which make recommendations on matters delegated to them under the Corporate Governance
Framework. The management of all Committees is in keeping with the basis on which meetings of the Board are managed, with open debate,
and adequate time for members to consider proposals which are put forward. The Chair of the Board and each Board Committee assumes
responsibility with support from the Company Secretary for the provision to each meeting of accurate and timely information.
Principle Four – Opportunity and Risk
The Board oversees the development and implementation of the Bank’s strategy, within the context of the wider strategy of LBG. Consideration
is given to strategic opportunities, and the Board’s annual cycle of meetings includes sessions dedicated to debating strategic priorities and
‘Extended business updates' into business areas and key risk areas, as well as one meeting focused on strategy.
The Board is also responsible for the long-term sustainable success of the Bank, ensuring it generates value for its shareholder and delivers a
positive contribution to society. The Board agrees the Bank’s culture, purpose, values and strategy within those set by LBG, and sets
expectations for risk management, financial performance and reporting. The specific aims and objectives of the Board are formalised within the
Bank’s Corporate Governance Framework, which also sets out the key decisions and matters reserved for the Board’s approval.
Strong risk management is central to the Bank’s strategy along with a robust risk control framework which acts as the foundation for sustainable
business growth. The Board agrees the Bank’s risk appetite, within the overarching risk appetite of LBG, and monitors the effectiveness of risk
management with the support of the Board Risk Committee. Board level engagement, coupled with the direct involvement of senior
management ensures that escalated risk issues are promptly addressed, and remediation plans are initiated where required.
The Bank’s risk appetite, principles, policies, procedures, controls and reporting are managed in conjunction with those of LBG, and are
regularly reviewed to ensure they remain fully in line with regulations, law, corporate governance and industry best practice. The Bank’s principal
risks are discussed further on pages 9 to 12.
Principle Five – Remuneration
The Remuneration Committee of the Board is responsible for reviewing and making recommendations to the Board on the remuneration policy
for the Bank. This includes reviewing performance and approving remuneration arrangements ranging from the remuneration of directors and
members of the Executive to that of all other colleagues where the regulators require the Bank to implement a specific approach to their
remuneration, such as Senior Managers and other material risk takers. The activities of the Remuneration Committee extend to matters of
remuneration relevant to subsidiaries of the Group, taking into account the principles, policies and governance requirements of LBG and the
recommendations of LBG’s Group Remuneration Committee.