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The Governor and Company of the Bank of IrelandCorporate Governance Statement

2019

Governance

Contents

Corporate Governance Statement

Governor’s Introduction 3

Your Court 5

Report of the Court Nomination and Governance Committee 20

Report of the Court Remuneration Committee 24

Report of the Court Audit Committee 26

Report of the Court Risk Committee 31

Attendance table 35

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Note: Page numbers and note references in the Corporate Governance Statement reference to The Governor and Company of the Bank of Ireland (the ‘Bank’) Annual Report year ended 31 December 2019.

The Governor and Company of the Bank of Ireland Annual Report 2019


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GovernanceBusiness Review Financial Statements Other Information

Dear Shareholders,

I am pleased to present our Corporate GovernanceReport for 2019. This report provides an overview ofour governance in practice, including how the Courtof Directors (the ‘Court’) operates, how it spent itstime during the year and how it has evaluated itsperformance. It includes reports from the fourmandatory Court committees and explains how theprinciples of good governance are embedded.

Following a corporate reorganisation in 2017 Bankof Ireland Group plc (BOIG plc), was introduced asthe listed holding company of the Group. Asexisting corporate governance requirementscontinue to apply at Bank level, with certain ofthose requirements also applying at BOIG plc level,the existing Court committees were replicated atBOIG plc level. It was agreed with the ECB that theMembership of the Board and Court and their maincommittees (Audit, Risk, Nomination andGovernance and Remuneration) would be identical.This mirrored board approach means that mattersrelevant to both BOIG plc (the ‘Holding company’)and Bank can be considered by their Boards andCommittees simultaneously.

Any references to the ‘Board’ or ‘Court’ / ‘Board’ or‘Court’ Risk Committee, etc., individually in thisdocument should be read as a reference to thatbody for both BOIG plc and Bank unless thecontext specifies or requires otherwise.

We believe that the role of the Court is to promotethe long-term success of the Group, whilstcontributing to wider society. In order to do this, theGroup must have a robust corporate governanceframework, providing systems of checks andcontrols to drive accountability and better decision-making, with appropriate policies and practices inplace to ensure that the Court and its committeesoperate effectively.

The Court is committed to high standards ofgovernance designed to protect the long-terminterests of shareholders and all other stakeholders,while promoting the highest standards of integrity,transparency and accountability.

A key objective of the Group’s governanceframework is to ensure compliance with applicablecorporate governance requirements. During 2019the Group’s requirements comprised of: • Central Bank of Ireland Corporate Governance

Requirements for Credit Institutions 2015 (‘IrishCode’)1.

• Irish Corporate Governance Annex2.• S.I. No. 158/2014 - European Union (Capital

Requirements) Regulations 2014.

• European Banking Authority Guidelines oninternal governance under Directive2013/36/EU.

• Joint European Securities and Markets Authority(ESMA) and European Banking Authority (EBA)Guidelines on the assessment of the suitabilityof members of the management body.

• UK Corporate Governance Code 2018 (‘UKCode’).

The Group complied with all applicable corporategovernance requirements throughout 2019.Corporate governance developments are kept undercontinuous review in order to ensure that theGroup’s governance structures evolve and remainappropriate for a significant credit institution.

People and culture

Our people remain at the very core of what we do,and I continue to be impressed by the commitmentand enthusiasm shown by all of our colleaguesduring the Court’s visits to various locations andother engagements with colleagues during the year.Our culture and values are key to help us achieveour strategic objectives and create value for allstakeholders, and I was delighted to see animprovement in our engagement and culturalembedding scores during 2019. I know we still havea way to go but I am encouraged by thecommitment and progress I am seeing, with morecolleagues taking accountability for making theGroup a better place to work.

The Court has worked with the Executive team toensure a continued focus on the Group’s culture,where high standards and customer values are atthe core of all decisions. The Court is satisfied thatthe Group’s purpose of enabling our customers,colleagues and communities to thrive is fully alignedwith the Group’s culture, values and strategicpriorities.

As noted on page 21, we took the positive step todesignate Eileen Fitzpatrick as our WorkforceEngagement Director, with a view to enhancing theGroup’s existing engagement mechanisms betweenthe Court and the workforce and to strengthen the‘employee voice’ at the Court table and whenmaking decisions. This mechanism, along with otherways in which we seek out the views of the Group’sstakeholders, notably our customers, shareholdersand regulators, will continue to enhance the Court’sdiscussions and decisions.

Strategic priorities

Delivery of the Group’s strategic priorities, toTransform the Bank, Serve Customers Brilliantly andGrow Sustainable Profits, remains a priority for the

Corporate Governance StatementGovernor’s Introduction

Patrick KennedyGovernor

1 The Governor and Company of the Bank of Ireland, was subject to the Irish Code, (which is available on www.centralbank.ie) throughout 2019.The Bank is also subject to the additional requirements of Appendix 1 and Appendix 2 of the Irish Code for High Impact Designated Institutions,and Credit Institutions which are deemed ‘Significant’ Institutions (for the purposes of the CRD IV), respectively.

2 The Irish Corporate Governance Annex to the Listing Rules of the Irish Stock Exchange, t/a Euronext Dublin which is available on www.ise.ie.


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Court and Executive team. These priorities were originally set outat the Group Investor Day on 13 June 2018.

Progress against key performance indicators (KPIs) linked to theGroup’s strategic priorities is overseen by the Court. Given thescale of the transformation that the Group is embarking upon,across our culture systems and business model BOIG plcestablished a GTOC to facilitate more detailed and timelyoversight of the Group’s transformation programme, whichreports to each Court meeting. I am joined on that Committee bymy Court colleagues, Ian Buchanan, Patrick Mulvihill, RichardGoulding and Michele Greene. The CEO, Chief Operating Officer,CEO Retail Ireland and Chief Risk Officer (CRO) attendCommittee meetings along with other members of seniormanagement as required.

Responsible and Sustainable Business

We have enhanced our governance structure to provide moreboard focused oversight and responsibility for our RSB agenda.The Court Nomination and Governance Committee, a committeeof the Court with oversight of the Group’s CorporateResponsibility Programme as well as nomination and corporategovernance matters, will now oversee the Group’s RSBframework and strategy on behalf of the Court. To reflect itsexpanded remit, the Committee is being renamed the CourtNomination, Governance and Responsible Business Committee.The Court recognises and appreciates the key role it has inensuring that RSB is increasingly integral to the Group’soperations and long term sustainability.

Court changes in 2019

The Court Nomination and Governance Committee is responsiblefor reviewing the composition of the Court and its Committeesand assessing whether the balance of skills, experience,knowledge and independence is appropriate to enable them tooperate effectively.

Eileen Fitzpatrick joined the Court in May 2019 as an independentNon-Executive Director (NED), bringing extensive public sectorand capital markets experience to the Court. Michele Greene wasnominated by the Minister for Finance and was appointed to theCourt in December 2019. Michele is an experienced retail bankerwith a strong understanding of evolving customer requirementsand has significant experience in the digitalisation of banking

processes and systems. Having been identified by the Courtduring October 2019 to succeed Andrew Keating as ChiefFinancial Officer (CFO) and Executive Director, Myles O’Gradyreceived regulatory approval and was appointed to the Court inJanuary 2020. I am delighted they have joined the Court and lookforward to working with them in the years ahead.

I would like to thank each of the Directors for their commitmentand support during 2019. I would also like to express the Court’sappreciation to Kent Atkinson and Andrew Keating, both of whomstepped down during 2019, for their significant contributions tothe Group during their respective tenures.

The composition of the Court remains under continuous reviewand the Court Nomination and Governance Committee maintainsa constant focus on succession planning to ensure thecontinuation of a strong and diverse Court, which is appropriateto the Group’s purpose and the industry within which it operates.

Court and Individual Effectiveness Evaluation

During 2019, Praesta Ireland conducted the annual effectivenessevaluation of the Court. Detail on the outcome of this evaluation,which, in summary, concluded that the Court is effective can befound on page 30. I also conducted a review of the performanceof individual Directors, following which I concluded that individualdirectors continue to demonstrate commitment to their roles. AllDirectors are considered to be experienced and knowledgeable,and I am confident that they each bring valuable skills to theCourt and provide an objective perspective. The Court considersthat the effective contribution of each of the individual directorsand the Court as a whole is, and continues to be, important to thelong-term sustainable success of the Group. As part of theevaluation process, we have identified some areas forenhancement which are welcomed, and I look forward toreporting on progress in those areas in the next report.

Looking ahead

The Court will continue to work effectively with the Executiveteam into 2020 to ensure continued focus on and delivery of theGroup’s strategy in order to create sustainable long-term value forour shareholders. The Group’s governance framework will remainunder continuous review to ensure it remains robust andfacilitates effective decision making and appropriate Courtoversight.

Governor’s Introduction (continued)

Patrick KennedyGovernor

21 February 2020


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Your Court

Patrick KennedyIndependent (on appointment)

RoleNon-Executive Director (July 2010).Governor (August 2018, Deputy GovernorApril 2015). Chair, Court Nomination andGovernance Committee (August 2018,Member from September 2014).

Member, Risk Committee from January2011 and Chair July 2016 to July 2018.Member, Remuneration Committee fromJanuary 2011 to July 2016. Member of theAudit Committee from July 2016 to July2018.

Member of GTOC (August 2018).

Particular SkillsStrong leadership qualities. Deepknowledge of the Bank with exceptionalcommercial acumen. In-depth knowledgeof international business, management,finance, corporate transactions, strategicdevelopment and risk management gainedfrom a highly successful career in nationaland international business.

External AppointmentsChairman and chair of the audit, risk,remuneration and nomination committeesof Cartrawler.

ExperiencePatrick was chief executive of PaddyPower plc from 2006 to 2014, prior towhich he served as an executive directorfrom 2005 and non-executive director from2004. Prior to joining Paddy Power plc,Patrick worked at Greencore Group plc forseven years where he was chief financialofficer and also held a number of seniorstrategic and corporate development roles.He previously worked with KPMGcorporate finance in Ireland and theNetherlands, with McKinsey & Co. inLondon, Dublin and Amsterdam and as anon-executive director of Elan Corporationplc.

QualificationsFellow of Chartered Accountants Ireland.

Patrick HarenIndependent

RoleNon-Executive Director (January 2012).Deputy Governor (August 2018). SeniorIndependent Director (SID) (April 2015).Member, Nomination and GovernanceCommittee (November 2015). Member,Audit Committee from January 2012 toJuly 2018. Remuneration committee Chairfrom May 2015 and Member from January2012 to January 2020.

Trustee of the Bank of Ireland StaffPensions Fund (BSPF).

Particular SkillsExperienced chief executive officer whohas gained extensive strategic, corporatedevelopment and transactional experience.

External AppointmentsNone.

ExperiencePatrick acts as an Advisor to Green SwordEnvironmental Ltd. He is a former chiefexecutive officer of the Viridian Group,having joined Northern Ireland Electricity in1992 as chief executive. He previouslyworked with the ESB, including as director- New Business Investment and alsoserved as a board member of InvestNorthern Ireland for a number of years.Patrick led the privatisation of NorthernIreland Electricity by Initial Public Offering(IPO) and grew the business under the newholding company Viridian through to 2007,positioning the company as the marketleader in independent electricity generationand supply in competitive markets inIreland, North and South. He is a pastdirector of Bank of Ireland (UK) plc wherehe also served as Chair of theRemuneration Committee and a memberof the Nomination Committee.

QualificationsFellow of the Institute of Directors (UK).Awarded a knighthood in 2008 for servicesto the electricity industry in NI Member ofthe Institute of Banking (Ireland).

Francesca McDonaghNon-Independent

RoleGroup Chief Executive Officer andExecutive Director (October 2017).

Particular SkillsA skilled global banker, renowned forstrategic thinking and a proven trackrecord in successfully executing strategy.A history of delivering strong financialperformance coupled with leadership oftransformation to drive future results.Experience in a range of senior bankingroles, and in a range of countries andoperating structures. She brings to theBoard a leadership style characterised bystrong commercial results orientation, aclear strategic vision and significantcustomer focus.

External AppointmentsDirector of IBEC Company Limited byGuarantee. Member of the PrudentialRegulation Authority (PRA) PractitionerPanel.

ExperienceFrancesca joined the Group from HSBCGroup, where she held a number of seniormanagement roles over a twenty yearperiod including Group General Managerand Regional Head of Retail Banking andWealth Management, UK and Europe,Regional Head of Retail Banking andWealth Management, Middle East andNorth Africa, and Head of PersonalFinancial Services, Hong Kong. She haspreviously served on the board of theBritish Bankers’ Association, where shewas Deputy Chair, and on the board of theNational Centre for Universities andBusiness in the UK.

QualificationsBachelor of Arts Degree in Politics,Philosophy and Economics from OxfordUniversity. Awarded an Order of the BritishEmpire in 2017 for services to banking.


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Your Court (continued)

Ian BuchananIndependent

RoleNon-Executive Director (May 2018).Member, Risk Committee (May 2018).Director, Bank of Ireland (UK) plc(September 2018) and a member of itsRisk Committee (October 2019).

Chair of GTOC (August 2018).

Particular SkillsExtensive technology, digital, businesstransformation and customer operationsexperience gained through his work in anumber of international retail, commercialand investment banks.

External AppointmentsNon-executive director of OpenworkHoldings Limited.

ExperienceIan was group chief information officer forBarclays plc and chief operating officer forBarclaycard until 2016. Before joiningBarclays in 2011, Ian was chief informationofficer for Société Générale Corporate &Investment Banking (2009 to 2011), amember of the public board and groupmanufacturing director of Alliance &Leicester plc (2005 to 2008) and a memberof the executive committee and chiefoperations and technology officer ofNomura International (1994 to 2005). Ian’searlier career was spent at Credit Suisse,Guinness, and BP.

QualificationsBachelor of Science degree in Physicsfrom the University of Durham.

Evelyn BourkeIndependent

RoleNon-Executive Director (May 2018).Member, Audit and Nomination andGovernance Committees (May 2018).

Particular SkillsStrong track record in global executivemanagement and extensive experience infinancial services, risk and capitalmanagement, and mergers andacquisitions.

External AppointmentsGroup chief executive officer of BUPA.

ExperienceEvelyn was appointed group chiefexecutive officer of BUPA in July 2016,having been Acting CEO from April 2016.She is also a member of the BUPA board.She joined BUPA as chief financial officerin September 2012, from Friends LifeGroup, where she was chief executiveofficer of its Heritage division. Previously atFriends Provident, she was the executivedirector responsible for strategy, capitaland risk and, prior to that, chief financialofficer. She was previously a non-executive director of the IFG plc, Dublin,where she was chair of the board riskcommittee. Evelyn’s earlier career wasspent at Standard Life Assurance plc,Chase De Vere Financial Solutions, St.James’s Place, Nascent Group, TillinghastTowers Perrin, in the UK, and LifetimeAssurance and New Ireland Assurance inDublin.

QualificationsFellow of Institute and Faculty of Actuaries.MBA from London Business School.

Eileen FitzpatrickIndependent

RoleNon-Executive Director (May 2019),Member, Audit and RemunerationCommittees (May 2019). Workforceengagement Director (January 2020).

Particular SkillsEileen has extensive capital markets andpublic sector experience, and has held anumber of senior roles in both the assetmanagement and stockbroking industries.

External AppointmentsChairman of the Outside AppointmentsBoard, Department of Public Expenditureand Reform.

ExperienceEileen joined the National TreasuryManagement Agency (NTMA) in 2006 as adirector, where she oversaw the AlternativeAssets Investment Programme, for theNational Pensions Reserve Fund. Eileenwas subsequently appointed as head ofNewERA at the NTMA, a position she heldfrom November 2011 to January 2019.Prior to her appointment at the NTMAEileen was chief executive officer at AIBInvestment Managers from 2000 to 2006.From 1987 to 2000 Eileen held a numberof senior investment and stockbrokingpositions, including with AIB InvestmentManagers, Goodbody Stockbrokers,National City Brokers and MontgomeryGovett.

Eileen has served in a number of non-executive positions including as chairmanof the Irish Association of InvestmentManagers, as a board member of theChartered Accountants Regulatory Board,as a member of the Government’s TopLevel Appointments Committee, and as amember of the Governing Body ofUniversity College Dublin.

QualificationsPhd in Science from University CollegeDublin.


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Richard GouldingIndependent

RoleNon-Executive Director (July 2017). Chair,Risk Committee (Aug 2018, Member, July2017). Member, Remuneration Committee(July 2017). Member, Audit Committee(August 2018).

Member of GTOC (August 2018).

Particular SkillsExtensive risk management and executiveexperience in a number of banks with aninternational profile, and brings a strongunderstanding of banking and bankingrisks, with a deep knowledge ofoperational risk.

External AppointmentsNon-executive director of Citigroup GlobalMarkets Limited, where he is chair of therisk committee and a member of the auditand remuneration and nominationcommittees. Non-executive director ofZopa Bank Limited, where he is chair ofthe risk committee and a member of theaudit, nomination and remunerationcommittees.

ExperienceRichard held the role of group chief riskofficer (2006 to 2015) and director (2013 to2015) at Standard Chartered Bank, wherehe was a member of the group executivecommittee, prior to which he held the roleof chief operating officer, WholesaleBanking Division. Before joining StandardChartered in 2002, he held seniorexecutive positions with Old MutualFinancial Services in the U.S., UBSWarburg / SBC Warburg, London andSwitzerland, Astra Holding plc, BankersTrust Company and the Midland BankGroup, London.

QualificationsQualified Chartered Accountant (SouthAfrica), Bachelor of Commerce degree anda postgraduate degree in finance from theUniversity of Natal, South Africa.

Fiona MuldoonIndependent

RoleNon-Executive Director (June 2015).Member, Risk Committee (November2015). Member, Nomination andGovernance Committee (January 2019).

Particular SkillsSignificant experience in governance,regulatory compliance and financialoversight and is an experienced financialservices professional. Significant previousexperience within a financial institutionwith an international focus.

External AppointmentsGroup Chief Executive of FBD Holdingsplc and Chief Executive of FBD Insuranceplc. Director of Insurance Ireland (MemberAssociation) CLG.

ExperienceFiona is group chief executive of FBDHoldings plc and FBD Insurance plc, oneof Ireland's largest property and casualtyinsurers. She served from 2011 to 2014with the Central Bank of Ireland (CBI)including as director, Credit Institutionsand Insurance Supervision. Fiona spent 17years of her career with XL Group inDublin, London and Bermuda, where sheworked in various management positionsincluding general insuranceresponsibilities, corporate treasury andstrategic activities including capitalmanagement, rating agency engagementand corporate development.

QualificationsBachelor of Arts Degree from UniversityCollege Dublin, Fellow CharteredAccountants Ireland.

Michele GreeneNon-Independent

RoleNon-Executive Director (December 2019).Member, Risk Committee and GTOC(December 2019).

Particular SkillsExtensive experience of financial servicesand retail banking, particularly in the areasof payments and digital innovation.

External AppointmentsDirector of Mololo Limited.

ExperienceMichele held the role of managing directorof Virgin Money’s Digital Bank until July2018, prior to which she was director ofstrategic development, responsible for thebank’s future development. Michele joinedVirgin Money initially as director ofbanking, with responsibility for building thebank’s new credit card business. Beforejoining Virgin Money, she was chieffinancial officer of MBNA Europe whereshe held executive positions on the boardsof MBNA Europe Ltd and Premium CreditFinance Limited.

Michele’s earlier career was spent atGoldman Sachs, Credit Lyonnais andKPMG.

QualificationsMasters Degree from Trinity College Dublinand Fellow of Chartered AccountantsIreland.



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Steve PatemanIndependent

RoleNon-Executive Director (September 2018).Chair, Remuneration Committee (January2020, Member September 2018). Member,Audit and Risk Committees (September2018).

Particular SkillsBrings to the Board the strategic insightsof a chief executive officer of a UK Bankand a strong lending and creditbackground with deep commercialexperience including the operationalchallenges facing lending institutions.

External AppointmentsDirector and CEO of Hodge Group(stepping down in 2020 due to join AroraGroup later in 2020 as CEO.

ExperienceSteve joined Julian Hodge Bank Limited asCEO in January 2019, and was appointedto its board in February 2019. Prior to this,Steve was CEO of Shawbrook BankLimited from October 2015 to December2018. He joined Shawbrook fromSantander UK, where he was executivedirector and head of UK banking and wasresponsible for the bank’s corporate,commercial, business and retail bankingoperations as well as wealth management.He also held a number of senior positionsat Santander UK, Royal Bank of Scotlandand NatWest. Steve was appointed vicepresident of the Chartered BankersInstitute in June 2017. He was director ofThe Mortgage Lender Limited from May2018 to January 2019.

QualificationsFellow of the Chartered Banker Institute.Awarded an Honorary Doctorate from theUniversity of Kent for services to banking.

Myles O’GradyNon-Independent

RoleGroup Chief Financial Officer, ExecutiveDirector (January 2020).

Particular SkillsSignificant expertise working withinternational and domestic regulators,government and state authorities,investors, market analysts andinternational investment banks.Experienced across strategy development,business restructuring and recovery,finance function transformation, investorrelations and IPOs.

External AppointmentsNone.

ExperienceMyles has 30 years’ experience as afinance professional with over 25 years infinancial services. Prior to joining theGroup he was chief financial officer atD|Res Properties, an Irish homebuildingand property development company.Previously, he was group director offinance and investor relations at Allied IrishBank Group plc and Subsidiaries (AIB), anIrish financial services group operatingpredominantly in the Republic of Irelandand the UK.

Myles’ earlier career was spent at Citibank,Dresdner Kleinwort Benson and AIB Bank.

QualificationsFellow of the Chartered Association ofCertified Accounts, an INSEAD certifiedboard director and member of the Instituteof Directors Ireland.

Patrick MulvihillIndependent

RoleNon-Executive Director (December 2011). Chair, Audit Committee (April 2018,Member December 2011). Member, RiskCommittee (December 2011 to May 2017,January 2018 to date).

Member of GTOC (April 2016). Trustee ofthe BSPF (December 2017).

Particular SkillsIn-depth knowledge of financial andmanagement reporting, regulatorycompliance, operational, risk and creditmatters within a global financial institution.

External AppointmentsNon-executive director of InternationalFund Services (Ireland) Limited. Director ofBeachvista Limited.

ExperiencePatrick spent much of his career atGoldman Sachs, retiring in 2006 as globalhead of operations covering all aspects ofcapital markets operations, assetmanagement operations and paymentoperations. He previously held the roles ofco-controller, co-head of global controller’sdepartment, covering financial /management reporting, regulatoryreporting, product accounting andpayment services. He was also a memberof the firm’s risk, finance and credit policycommittees. Patrick has over twenty years’experience of international financialservices and has held a number of seniormanagement roles based in London andNew York with Goldman Sachs.

QualificationsFellow of Chartered Accountants Irelandand Associate of the Institute of Directors.


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Patrick Mulvihill (Chair)

Evelyn Bourke

Eileen Fitzpatrick

Richard Goulding

Steve Pateman

Richard Goulding (Chair)

Ian Buchanan

Michele Greene

Fiona Muldoon

Patrick Mulvihill

Steve Pateman

Steve Pateman (Chair)

Eileen Fitzpatrick

Richard Goulding

Patrick Kennedy (Chair)

Evelyn Bourke

Patrick Haren

Fiona Muldoon

Court Audit Committee

Court Risk Committee

CourtRemuneration Committee

Court Nomination & Governance Committee

Group Executive

Francesca McDonagh Group Chief Executive Officer

Sean Crowe Chief Executive, Markets and Treasury

Ian McLaughlin Chief Executive, Retail (UK)

Henry Dummer Chief Marketing Officer

Matt Elliott Chief People Officer

Tom Hayes Chief Executive, Corporate Banking

Gavin Kelly Chief Executive, Retail (Ireland)

Myles O’Grady Group Chief Financial Officer

Vincent Mulvey Group Chief Risk Officer

Jackie Noakes Chief Operating Officer

Mark Spain Chief Strategy Officer

Oliver Wall Chief of Staff & Head of Corporate Affairs

Sarah McLaughlin Group Secretary & Head of Corporate

Governance

Group Risk Policy Committee

Vincent Mulvey Group Chief Risk Officer (Chair)

Sean Crowe Chief Executive, Markets and Treasury

Tom Fee Head of Enterprise Risk Management

Tom Hayes Chief Executive, Corporate Banking

Myles O’Grady Group Chief Financial Officer

Gavin Kelly Chief Executive, Retail (Ireland)

Francesca McDonagh Group Chief Executive Officer

Declan Murray Chief Credit Officer

Gabrielle Ryan Group General Counsel

Jackie Noakes Group Chief Operating Officer

Court


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Governor’s tenure

The new UK Code and the supporting Guidance on BoardEffectiveness nominate service on the board for more than nineyears from the date of first appointment as a specificconsideration in the evaluation of the independence of Non-Executive Directors. The Governor is not subject to the UKCode’s independence test other than on appointment. However,the UK Code recommends that the chairman is subject to similarlength of service considerations and should not remain in postlonger than nine years. The UK Code provides for extension ofthe chairman’s tenure to facilitate succession planning and thedevelopment of a diverse board, particularly in those cases wherethe chairman was an existing non-executive director onappointment. The principles and provisions of the UK Code in thisarea are in support of the maintenance of the right combination ofskills, experience and knowledge on the board, supported byformal processes of appointment and annual evaluation ofperformance.

Patrick Kennedy was appointed Governor in August 2018. Hewas independent under the UK Code at the time of hisappointment.

Mr Kennedy’s appointment followed a rigorous process, led bythe SID, with external benchmarking by Egon Zehnder whichrated him as an exceptional candidate for the role. Mr Kennedywas an existing Non-Executive Director, appointed to the Court inJuly 2010. During his tenure, Mr Kennedy served on every majorcommittee of the Board, including as Chair of the Risk Committeeand Deputy Governor until July and August 2018 respectively.The years prior to his appointment as Governor, which arecalculated in the assessment of tenure, provided Mr Kennedywith a detailed understanding of the business and enabled him toforge effective relationships not only with the executive but alsowith the wider management team, factors which the Court regardas critical to his current success as Governor.

As set out in some detail in the 2018 Annual Report, in arriving atits decision at the time of his appointment as Governor, the Courttook into account a number of exceptional factors, including: theanticipated very significant level of turnover on the Court due toretirements over the medium term; the recent appointment of anexternal candidate, previously UK-based, to the Group CEO role;and the Court’s preference that the incoming Governor shouldhave a complementary knowledge of the Irish environment,embracing customers, regulators and Government, andknowledge and understanding of the Bank of Ireland Group. Inthe view of the Court, these factors continue to be relevant as thecompany goes through a period of continuing significant change,including transformation of culture and a multi-year programme ofinvestment in systems. In addition, having regard for the relativelyrecent appointments of the two externally recruited executivedirectors (the CEO in October 2017 and CFO in January 2020),the Court is satisfied that there is no issue of significantconcurrent service arising as a governance concern.

Mr Kennedy brings very strong leadership to the Court. Hedemonstrates independent and objective judgement andpromotes constructive challenge amongst Court members. In his

short time in the role, he has demonstrated an innovativeapproach to bringing new formats and structures to Courtmeetings to improve the effectiveness of the Court. He hasfocused strongly on Court succession and diversity and hasreinforced relationships with customers, regulators andshareholders. He is rated very highly by all Court members in the2019 Governor effectiveness evaluation led by the SID, supportedby Praesta Ireland who led the external effectiveness review ofthe Court as a whole in 2019.

Mr Kennedy combines a deep knowledge of the Group withexceptional commercial acumen gained from a highly successfulcareer in national and international business. As an Irish-basedGovernor, the Court believes he provides valuable knowledge andexperience of the customer, regulatory and political environmentand necessary continuity during a period of significant change.As such, the Court considers it appropriate for Mr Kennedy toremain in role for a further period and will be recommending hisre-election in 2020. The company will consult with shareholderson the matter of tenure during the second half of the year, settingout its views on the wider issues of succession planning at Courtlevel and its assessment of the best interests of shareholders.

Court committees

The Court is assisted in the discharge of its duties by a number ofCourt Committees, whose purpose it is to consider, in greaterdepth than would be practicable at Court meetings, matters forwhich the Court retains responsibility. Each Committee operatesunder terms of reference approved by the Court. Appropriatecross-membership of key Court Committees, including betweenthe Audit and Risk Committees and Remuneration and RiskCommittees, is ensured. The Court Nomination and GovernanceCommittee formally review the composition and purpose of theCourt Committees annually on behalf of the court.

The minutes of all meetings of Court Committees are circulated toall Directors for information and are formally noted by the Court.Papers for all Court Committee meetings are also made availableto all Directors, irrespective of membership. Such circulation ofminutes and papers are restricted should there be a conflict ofinterest or issues of personal confidentiality.

The terms of reference of the Court Audit Committees, the CourtRisk Committee, the Court Nomination and GovernanceCommittee and the Court Remuneration Committee are availableon the Group’s website: www.bankofireland.com/about-bank-of-ireland/corporate-governance.

In carrying out their duties, Court Committees are entitled to takeindependent professional advice, at the Group’s expense, wheredeemed necessary or desirable by the Committee Members.

Reports from the Court Audit Committee (CAC), the Court RiskCommittee, the Court Nomination and Governance Committeeand the Court Remuneration Committee are presented on pages37 to 51.


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Court composition and succession

The Court comprises twelve Directors: two Executive Directors,the Governor, who was independent on appointment, eightindependent NEDs and a Director nominated by the Minister forFinance, who is deemed to be a non-independent NED. Thebiographical details of each of the directors, along with each oftheir individual dates of appointment, are set out on pages 22 to25.

The Court considers that a board size of 10 to 12 Directors allowsfor a good balance between having the full range of skillsnecessary on the Court and to populate its committees andretaining a sense of accountability by each Director for Courtdecisions.

Both on an individual and a collective basis, the Directors areconsidered to have the range of skills, understanding, experienceand expertise necessary to ensure the effective leadership of theGroup and that high corporate governance standards aremaintained. The Court Nomination and Governance Committee(the ‘Committee’) leads the process for appointments to theCourt and ensures plans are in place for orderly succession toboth the Court and Executive positions.

The Committee ensures a formal, rigorous and transparentprocedure when considering candidates for appointment to theCourt and maintains continuous oversight of the Court’scomposition to ensure it remains appropriate and has regard forits purpose, culture, major business lines, geographies, riskprofile and governance requirements.

As part of the Committee’s succession planning process, it hasregard for the impact of expected retirements of directors and theGroup’s desired culture and strategic direction. As part of theprocess, the Committee prepares a detailed role profile, based onits analysis of the skills and experiences needed and selects,where appropriate, an external search firm to facilitate theprocess. The Committee follows the requirements of the DirectorsAssessment Policy, which is fully aligned with the Joint ESMAand EBA Guidelines on the assessment of the suitability ofmembers of the management body, and ensures a robustassessment of potential candidates which includes interview bythe Court Nomination and Governance Committee members andrecommendation to the Court prior to the submission of fitnessand probity applications to the regulator for consideration.

All potential candidates are assessed to ensure they have theability to act with integrity, lead by example and promote thedesired culture, which evidences a commitment to high standardsand values where customers are at the heart of decision-making.

2019 Court changes

During 2019, Kent Atkinson, an experienced banker, retired fromthe Court. In preparation for his retirement, the Committee hadidentified deep experience in corporate and retail banking as akey requisite skills and experience profile for the Court. StevePateman, who joined the Court in September 2018, replenishedthe Court’s core banking skills.

Also during 2018, the Committee commenced a search for adirector with a number of skills, experiences and characteristics,with a focus on further diversity and knowledge of the Irish

market and environment. Eileen Fitzpatrick was identified fromthat search and was appointed in May 2019. Eileen bringsstrategic insights of a chief executive officer of an Irish assetmanagement company and a strong financial servicesbackground, with extensive public sector and deep commercialexperience.

Having regard for the Group’s transformation programme, theCommittee identified transformation, change and technology aspotential areas of focus for further NED recruitment. Against thatbackdrop, Michele Greene was nominated by the Minister forFinance and was appointed to the Court in December 2019.Michele brings significant and recent experience of digitalbanking and a focus on evolving customer expectations.

The selection of Myles O’Grady as the preferred candidate tosucceed Andrew Keating as CFO and Executive Director was ledby the CEO and supported by the Committee. Myles joined theGroup in June 2019 and brings a wealth of relevant externalexperience to the role.

An active search is underway to identify a NED with furthertechnology transformation experience and the Group looksforward to reporting positively on that search during 2020.

External support

The search process leading to the appointment of EileenFitzpatrick was facilitated externally by Leaders Mores, aconsulting company specialising in board level appointments.Leaders Mores is used for Court searches but has no otherconnection with the Group or individual directors. While thenomination of Michele Greene was a matter for the Minister forFinance, the Group requested Leaders Mores to provide theCourt with an independent assessment of Michele Greene’ssuitability as part of the wider due diligence assessment, prior toher being recommended by the Court for appointment.

Regulatory assessment and formal approval is required andreceived for all Court appointments.

Induction and continuous development

On appointment, each director receives an induction plan tailoredto his or her specific requirements. It consists of meetings withsenior management on Group and Divisional strategy, deep diveson businesses and an overview of the Group’s risk appetite andGroup Risk Framework, supplemented by sessions on themanagement of key risks and a comprehensive range of meetingscovering the Group’s regulatory environment, people strategies,technology and payments. Deep dives on capital and liquiditymanagement and an overview of the Group’s financial positionare also included, along with sessions relevant to membership ofspecific committees.

The continuous development requirements of the Court andindividual directors, as required, is informed by the outcome ofannual effectiveness reviews, emerging external developmentsand areas where individual directors have identified as areasrequiring focus. These requirements are met through theprovision of Court training, presentations, site visits and individualbespoke training sessions as required.


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Diversity

The Court is fully committed to diversity in allforms and truly believes that diversity is anessential ingredient of sound decision-making.The Court has an approved Court DiversityPolicy in place and, following review in 2019, ithas retained its target of a minimum of 33%female representation on the Court by the end of2020, with a medium term aspiration of achievingequal gender representation on the Court. Belowis an overview of the current Court profile.

In addition to collective education and development programmes in 2019, individual Directors actively engaged in one to one focus sessions withManagement on topics such as vulnerable customers, wealth and insurance, Small and Medium Enterprises (SMEs), the Irish Mortgage Market,technology transformation and the Irish Economy.

Eileen Fitzpatrick: As NED and member of Court Audit and Court Remuneration Committees.Michele Greene: As NED. Further induction on the Group Transformation Programme and Group Risk is scheduled to take place in 2020, in recognitionof her committee roles.Myles O’Grady: As Group CFO and Executive Director.

Tailored Induction Programmes

• Brexit preparedness. • Business module - Site visit to Banking 365 Kilkenny including

management presentation / listening in sessions.• Market risk training: Regulatory and market developments from

Group Market and Liquidity Risk (GM&LR).• Education / deep dive session on the net interest income reporting

process.• Code of Conduct.• Business module - Site visit to Northridge and Donegal Square

including management presentation / listening in sessions.

• Risk appetite: Definitions of non-financial risks and articulation ofappetite.

• IFRS17 and accounting standards.• Business module - Site visit to BOI IT Centre and Operations Centre;

Robotics and Automated Operations.• Business module - Site Visit to Limerick branch, BOI Workbench and

Bereavement Support Unit .

Court and Committee Education and Development

1 International experience shows Directors with experience in more than one geographical location.

InternationalExperience1

QualificationsAge Range

Gender

Australia 8%Africa 8%

MENA 33%

Asia 33%

Americas 33%

Europe 100%

Accountant50%

Inst. of Banking 17%

Science 17%

Actuary 8%

Engineer 8%

50yr - 59yr 67%

60yr - 69yr 25% 40yr - 49yr

8%

Male 58%

Female42%

Court

Executive Director2

Non-Executive Director10


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Assessing the Effectiveness of the Court

CourtThe Court seeks to continually enhance its operations and, each year, conducts a formal effectiveness evaluation of the Court, CourtCommittees and individual Directors. The Court is required to have an external evaluation conducted once every three years. During 2019,an external evaluation was carried out by Praesta Ireland, an executive coaching and leadership consultancy company. Praesta Irelandhas no other connection to the Group.

The Praesta Ireland evaluation comprised: • One to one interviews with all Directors, the Group Secretary

and a number of Group Executives.• A review of Court papers, including Court packs, Court

minutes and Court committee papers.• An online survey of Directors which sought their views on a

range of topics.• Attendance as an observer at the December 2019 Court

meetings.

The scope of the Praesta Ireland evaluation included:• The role of the Court.• Court culture and dynamics. • Court papers and reporting.• Risk management and internal control.• Performance evaluation.• Chairing of the Court.• Court composition, structure and processes.• Stakeholder management and communications.• Strategic focus, mission and vision.• Effectiveness of the committees of the Court.

Governor

The performance of the Governor was assessed during thePraesta Ireland evaluation and, led by the SID, the Court met todiscuss the Governor’s performance, in his absence. The SIDsubsequently provided an update on the positive outcome of thereview to the Governor. Patrick Kennedy is considered to be ahighly effective Governor and provides very strong leadership tothe Court. The Court confirmed its continued support for PatrickKennedy and his proposal for re-election at the 2019 AnnualGeneral Court (AGC). The Court also actively considered theGovernor’s tenure during this assessment.

Individual Directors

In addition to the Praesta Ireland evaluation process, theGovernor met with Directors on a one to one basis to discusstheir individual performance, taking account of their input, whichwas submitted in advance of the meetings. The Governorassessed each Director as being fully effective, with all Directorsdemonstrating commitment to their role, and their contributionscontinue to be important to the company’s long-term sustainablesuccess.

The independence of each Director is considered by the CourtNomination and Governance Committee prior to appointmentand reviewed annually thereafter using the independence criteriaset out in the Irish Code, relevant EBA / ESMA Guidelines and theUK Code. Michele Greene has been designated as non-independent by virtue of her nomination by the Minister forFinance. It has been determined that all other NEDs in officeduring 2019, with the exception of Michele Greene, areindependent in character and judgement and free from anybusiness or other relationship with the Group that could affecttheir judgement.

While Michele Greene has been designated as non-independent,the Court believes, based on her performance to date, that shetoo brings independent challenge and judgement to thedeliberations of the Court.

Patrick Kennedy was determined as independent onappointment. Whilst acknowledging that his independence maybe perceived to be impacted during his tenure due to nature ofthe role of Governor, as reported on page 27, Patrick Kennedy isregarded as continuing to operate in a manner that isindependent in character and judgement and remains objective inhis opinions.

A rigorous assessment was also undertaken of the independenceof Patrick Haren and Patrick Mulvihill who have served more thansix years on the Court. In both cases, the Governor concludedthat they continue to demonstrate independence of mind andtherefore remain independent.

2019 Conclusion

A consolidated report on the findings of the full evaluationprocess was presented to the Court. The outcome of theevaluation was positive, concluding that the Court and itsCommittees continued to be effective, with allDirectors demonstrating commitment to their roles.

Progress had been made on areas for enhancement identifiedduring the 2018 internal effectiveness evaluation process, relatingto a continued focus on Group Strategy, Court training andengagement with management on talent and successionplanning.

Recommendations from the 2019 Praesta Ireland evaluation,actions in respect of each of which are actively underway,included: • while recognising progress made in recent years on the

quality of Court reporting, room for greater brevity andsharper focus in Court papers;

• the need for the 2020 Court plan to allocate sufficient time toagreed key areas of focus;

• evolution of the continuous development programme forindividual Directors and the Court as a whole; and

• enhanced focus on non-financial risk management.


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How the Court spent its time at Court meetings in 2019

The Court considers and addresses opportunities and threats to its future success. It assesses the sustainability of its business modeland ensures that there is a strong corporate governance structure in place in order to deliver its strategy.

While not intended to be exhaustive, below is a high-level overview of a number of matters considered by the Court during 2019.

Business Context• Governor’s update. • CEO perspective and priorities. • Organisational Balanced Scorecard: Reporting on

performance relative to strategic, financial and non-financialKPIs.

• Tracker Mortgage Examination Programme.

Business Performance and Risk Management Reports• Financial and Business Performance.• Risk Reports.• Regulatory Interactions.• Funding and Liquidity Policy.• Internal Capital Adequacy Assessment.• Internal Liquidity Adequacy Assessment.

Strategic Priorities and Business Deep Dives• Group’s risk appetite framework and Risk Appetite Statement.• Brexit Readiness.• Progress implementing the Group’s 2018–2021 strategy• Key strategic priorities, including, but not limited to, reports

on:- the Transformation Programme, including systems and

Customer journey transformation;- the Group Culture Programme, including Inclusion and

Diversity and Employee Engagement;- Customer Experience, including Financial Wellbeing,

Customer Insights and Customer Experience reports; and- the Group’s ‘Fit for the Future’ cost management

programme.

• Marketing and Brand Framework.• Business Deep Dives, including on RoI Mortgages, Wealth

and Insurance, Great Britain (GB) and NI, Loan Book Growth,Home Building and Buying.

Reports from Court Committees• Recommendations from committees on key policies and

matters reviewed in depth by committees for Court decision.• Reports on committee proceedings.

Governance and Oversight• Key governance policies and documents.• Court, Committee and Individual Director’s Effectiveness

Evaluation.• Endorsement of Material Risk Takers (MRT)• Subsidiary oversight.• Tracking of agreed actions.

Environment• Investor Relations.• Economic Environment.• Stakeholder Engagements.

Attendance at meetings in 2019The Court held eight meetings during the year ended 31December 2019. Further details on the number of Court andCommittee meetings and attendance by individual Directors areset out on page 52.

Roles and Responsibilities

Role of the CourtThe Group is led by an effective and committed Court of Directors,who are collectively responsible for the long-term success of theGroup. The Court’s role is to provide leadership of the Groupwithin the boundaries of risk appetite and a framework of prudentand effective controls which enable risk to be identified, assessed,measured and controlled.

The Court sets the Group’s strategic aims and risk appetite tosupport the strategy, ensuring that the necessary financial andhuman resources are in place for the Group to meet its objectives.The Court ensures that the Group’s purpose, values, strategy andculture are all aligned and reviews management performance inthat regard.

The Court is responsible for endorsing the appointment ofindividuals who may have a material impact on the risk profile of

the Group and monitoring on an ongoing basis theirappropriateness for the role. The removal from office of the headof a ‘control function’, as defined in the Irish Code, is also subjectto Court approval.

The respective roles of the Governor and the Group CEO whichare separate, are set out in writing and have been agreed by theCourt. The Court has a schedule of matters specifically reservedfor its decision which is reviewed and updated regularly.

The Court approves the Group Risk Framework on an annual basisand receives regular updates on the Group’s risk environment andexposure to the Group’s material risk types. Further informationon risk management and the Court’s role in the risk governance ofthe Group is set out in the Risk Management Report on pages 110to 160 of the BOIG plc Group Annual Report 2019.


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The work of the Court follows an agreed schedule of topics whichevolves based on business needs and is formally reviewedannually by the Court.

Role of the GovernorThe Governor oversees the operation and effectiveness of theCourt, including ensuring that agendas cover the key strategicitems confronting the Group and encouraging all Directors toparticipate fully in the discussions and activities of the Court. Healso ensures that there is effective communication withshareholders and promotes compliance with corporategovernance standards. The Governor commits a substantialamount of time to the Group and his role has priority over anyother business commitment. During the year, the Governor andNEDs met without the Executive Directors present, to discuss arange of business matters.

Role of the Deputy Governor and Senior Independent DirectorThe Deputy Governor adopts the role of SID and deputises for theGovernor as required and is a Trustee of the BSPF scheme. TheSID provides a sounding board for the Governor and serves as anintermediary for the other directors and shareholders if they haveconcerns that contact through the normal channels of Governor,Chief Executive or other Executive Directors has failed to resolveor for which such contact is inappropriate. As appropriate and

when required, the SID meets a range of major shareholders inorder to develop a balanced understanding of their views. The SIDleads the evaluation of the Governor in conjunction with the otherdirectors and would normally take responsibility for an orderlysuccession process for the Governor, working closely with theNomination and Governance Committee.

Role of the Independent Non-Executive DirectorsThe NEDs (including the Governor and the Deputy Governor) bringindependent challenge and judgement to the deliberations of theCourt through their character, objectivity and integrity. As reported,while Michele Greene has been designated as non-independentby virtue of her nomination by the Minister for Finance, the Courtbelieves, based on her performance to date, that she too bringsindependent challenge and judgement to the deliberations of theCourt.

Role of the Group Chief Executive OfficerThe Group CEO is responsible for execution of approved strategy,holds delegated authority from the Court for the day to daymanagement of the business and has ultimate executiveresponsibility for the Group’s operations, compliance andperformance. Procedures are in place to review the Group ChiefExecutive’s contract at least every five years.

Roles and Responsibilities (continued)

The Directors have access to the advice and services of theGroup Secretary, who is responsible for advising the Court on allgovernance issues and for ensuring that the Directors areprovided with relevant information on a timely basis to enablethem to consider issues for decision and to discharge theiroversight responsibilities.

The Directors also have access to the advice of the Group LegalAdviser and to independent professional advice, at the Group’sexpense, if and when required. Committees of the Court havesimilar access and are provided with sufficient resources toundertake their duties.

The Group Secretary provides dedicated support for Directors onany matter relevant to the business on which they require adviceseparately from or additional to that available in the normal boardprocess. The Group has in place Directors’ and Officers’ liabilityinsurance in respect of legal actions against its Directors.

Matters reserved for the Court for approval include:

• Determination of strategy.• Determination of risk appetite within the parameters of the

Group’s Risk Appetite Statement.• Approval of the Group’s Internal Capital Adequacy

Assessment Process (ICAAP).• Promoting the appropriate culture, corporate values,

behaviours and ethics of the Bank.• Overseeing the management of the business.• Overseeing organisational structure.

• Overseeing the internal control, compliance, and riskmanagement systems of the Bank.

• Approval of the Bank’s business plans and budgets.• Overseeing corporate governance and succession planning.• Overseeing remuneration framework.• Acquisitions or divestments of companies involving a third

party or management buyout except for credit managementpurposes.

• Approval of CET1 capital investments of greater than €20million in a regulated subsidiary and €40 million in any othersubsidiary.

• Capital expenditure (in excess of €40 million) • Guarantees including those in respect of subsidiary

companies, entered into by the Bank, other than in thenormal course of business.

• Pension scheme funding / benefits - all changes to thefunding of pension schemes in the Bank and / or benefits ofsame.

• The approval of equity underwriting sums of greater than €20million.

• The approval of the appointment of directors and certainspecified senior management appointments.

The Group’s approach to Strategy Development andMonitoring Development of Transformation Strategy From mid-2017 the Court commenced work on a new strategy inthe context of a fundamental shift in customer demands forservice, increasing and changing competition and the need forbusiness and core systems transformation.


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In June 2018, the Group’s three strategic priorities were identifiedand announced to the Market:• Transform the Bank.• Serve customers brilliantly.• Grow sustainable profits.

These strategic priorities remain relevant today and significant timehas been spent during 2019 reviewing progress against thestrategy, framing the agenda for further strategic considerations totake place during 2020. Dedicated focus has been applied by theGTOC on the transformation of the Bank, with notable attentionand consideration applied to the systems transformation aspect ofthe strategy.

Monitoring of Transformation StrategyIn order to facilitate the Court in monitoring the execution of thestrategic plan, the Court:

• regularly discussed progress against execution priorities andtargets with the Group Chief Executive;

• received insights on stakeholder, employee and culturalmatters;

• assessed the progress of execution of strategy through deep-dive sessions across the key business divisions;

• received regular updates on the systems transformation,culture transformation and cost reduction programmes;

• received regular briefings from GTOC which has a mandate tooversee the transformation of the culture, systems andbusiness model structure, as well as the safe delivery of someregulatory mandated change programmes; and

• reviewed the potential implications of the UK’s preparations toleave the EU and oversight of management monitoring and riskmitigation activities.

Stakeholder Engagement

CustomersThe Group’s aim is to serve customers brilliantly by being thenumber one bank for service and having the best brand in ourtarget markets including the best bank for partnerships in the UK.The Court consistently reviews the strategy, receives updates onimplementation and reviews progress as part of the governanceprocess. The Group Customer Board, established in 2018, ensurescustomer focus by management, along with a Customer AdvisoryCouncil which ensures external challenge to our approach tocustomer engagement. The Court receives regular updates onprogress against customer metrics and reports from the GroupCEO, the Chief Marketing Officer and the respective businessCEOs. In addition, its understanding of customers’ perspectives isinformed by deep dives on customer themes and customercomplaints, and visits by Directors to customer call centres tohear customer voices at first hand. Directors met on severaloccasions with customers directly in 2019 reflecting theimportance of ‘serving customers brilliantly’ in our strategy.

ColleaguesThe Court receives regular updates on the progress of the GroupCulture Programme and reviews the outputs from the Group’sOpen View staff survey and receives updates on progress inimplementing actions in response to staff feedback. The Courtpays particular attention to the Group Code of Conduct and SpeakUp Policy, and the Court Nomination and Governance Committee(CN&GC) reviews its effectiveness annually. The Court strives tocreate an environment in which staff are encouraged to speak upwhere they have any concerns. Fiona Muldoon, on behalf of theCourt, actively sponsors the Group Code of Conduct and Speak-Up Policy.

During 2019, the Court met on several occasions with smallgroups of managers from across the Group in sessions called‘Visibility Sessions’, which form part of the annual Courtprogramme of work which is considered and approved each year.Directors conduct site visits from time to time, and during 2019the Court visited sites and met with staff in Belfast, Limerick andKilkenny. The 2020 Court programme of work is designed tofurther enhance engagement with colleagues and includes a widerrange of site visits across the Group.

Another positive step was taken in response to the UK Code, withthe Court designating Eileen Fitzpatrick as the WorkforceEngagement NED, the objective of which is to enhance theGroup’s existing engagement mechanisms between the Court andthe workforce and to strengthen the ‘employee voice’ at the Courttable and when making decisions. A set of objectives for thedesignated role has been established which will evolve during2020 as the role and its effectiveness, both for the Court and ourcolleagues, are considered. The role supplements what the Courtis already hearing about culture and behaviour and will report tothe Court regularly. Among other things, as part of the role, in2020, the Workforce Engagement NED will:• Engage with Management in deep dives on results of

OpenView staff surveys and planned actions.• Host Open Door sessions with self-nominating employees on

a bi-annual basis.• Attend the Group’s Colleague Recognition Event.

Regulators and GovernmentThe Governor and members of the Court regularly meet withrepresentatives from the regulators and government bodies,including the Joint Supervisory Team, the CBI, Bank of England(BoE), Financial Conduct Authority (FCA), PRA, European CentralBank (ECB) and the Department of Finance. Core themesdiscussed at these meetings include regulation and supervision,risk governance and oversight, challenges facing the bankingindustry, strategic challenges and rebuilding trust and culture. TheGovernor and Group CEO update the Court on their meetings withregulators and government representatives at each Court meeting.Management provide regular briefings to the Court on regulatoryengagement and correspondence which ensures that the Courtremains aware of regulatory expectations and areas of focus.

CommunitiesThe Group’s communities are those where it has a physicalpresence, where its employees live and work, as well as otherlocal and global groups and partners. The Group supports thewider community through its community investment programme,its support of local enterprise and through its financial wellbeingprogrammes as well as playing an active role in society. In 2019,the Group has donated over €2 million to charitable causes.


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StockholdersFollowing a corporate reorganisation in July 2017 whereby BOIGplc became the new holding company of the Bank. BOIG plcbecame the new listed company on both the Irish and Londonstock exchanges. All ordinary shareholdings in the Bank werecancelled by way of a scheme of arrangement and replaced byshareholdings in BOIG plc, on the basis of the exchange ratio ofone BOIG plc share for each individual holding of 30 units ofordinary stock in the Bank (which included a rounding up mechanism).

Notice of the Annual General Court (AGC) is provided at least 21days before the meeting, notice of the 2019 AGC was circulated to

stockholders on 9 April 2019. The Governor (who is also Chair ofthe Court Nomination & Governance Committee) and the Chairs ofthe Court Audit Committee (CAC), Court Risk Committee andCourt Remuneration Committee (CRC) were in attendance to hearthe views of preference shareholders and answer questions. It isusual for all Directors at the time of the AGC to attend. Allmembers of the Court attended the AGC 2019.

The AGC of the Group in 2020 is scheduled to be held on 19 May2020. Stockholders who will be unable to attend on this date areencouraged to submit queries and vote in advance to ensurecontinued participation.

Stakeholder Engagement (continued)

Court’s oversight of risk management and internalcontrol systems

Accountability and auditThe Report of the Directors, including a going concern statementand a viability statement, is set out on pages 53 to 54. ThisCorporate Governance Statement forms part of the Report of theDirectors.

Court ResponsibilityThe Court is responsible for overseeing the Group’s riskmanagement and internal control systems, which are designed tofacilitate effective and efficient operations and to ensure thequality of internal and external reporting and compliance withapplicable laws and regulations, and to review the effectivenessof same.

In establishing and reviewing the risk management and internalcontrol systems, the Directors carried out a robust assessment ofthe principal risks facing the Group including those that wouldthreaten its business model, future performance, solvency orliquidity, the likelihood of a risk event occurring and the costs ofcontrol. The process for identification, evaluation andmanagement of the principal risks faced by the Group isintegrated into the Group’s overall framework for risk governance.The Group is forward-looking in its risk identification processes toensure emerging risks are identified. The risk identification,evaluation and management process also identifies whether thecontrols in place result in an acceptable level of risk. At Grouplevel, a consolidated risk report and risk appetite dashboard isreviewed and regularly debated by the Court Risk Committee andthe Court to ensure satisfaction with the overall risk profile, riskaccountabilities and mitigating actions.

The report and dashboard provide a monthly view of the Group’soverall risk profile, key risks and management actions, togetherwith performance against risk appetite and an assessment ofemerging risks which could affect the Group’s performance overthe life of the operating plan.

Information regarding the main features of the internal control andrisk management systems is provided within the risk

management report on pages 110 to 160 of the BOIG plc GroupAnnual Report 2019. The Court concluded that the Group’s riskmanagement arrangements are adequate to provide assurancethat the risk management systems put in place are suitable withregard to the Group’s profile and strategy.

Control systemsThe Group’s overall control systems include:• a clearly defined organisation structure with defined authority

limits and reporting mechanisms;• three lines of defence approach to the management of risk

across the Group: line management in individual businessesand relevant Group functions, central risk managementfunctions, and Group Internal Audit (GIA);

• Court and Management Committees with responsibility forcore policy areas;

• a set of policies and processes relating to key risks;• reconciliation of data consolidated into the Group’s financial

statements to the underlying financial systems. A review ofthe consolidated data is undertaken by management toensure that the financial position and results of the Group areappropriately reflected, through compliance with approvedaccounting policies and the appropriate accounting for non-routine transactions;

• Codes of Conduct setting out the standards expected of allDirectors, officers and employees in driving an appropriate,transparent risk culture;

• a Risk Control Self-Assessment (RCSA) framework, whererisks are logged, managed and mitigated across the first-line,with clear reporting, escalation and second-line oversight.Action plans are developed and implemented to address anycontrol deficiencies;

• a comprehensive set of accounting policies; and • a compliance framework incorporating the design and testing

of specific controls over key financial processes.

The Group operates a comprehensive internal control frameworkover financial reporting with documented procedures andguidelines to support the preparation of the consolidated financialstatements.


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The main features are as follows:• a comprehensive set of accounting policies relating to the

preparation of the annual and interim financial statements inline with IFRS as adopted by the EU;

• an independent internal audit function with responsibility forproviding independent, reasonable assurance to key internal(Court and Subsidiary Audit and Risk committees and SeniorManagement) and external (Regulators and external auditor)stakeholders on the effectiveness of the Group’s riskmanagement and internal control framework;

• a compliance framework incorporating the design and testingof specific controls over key financial processes to confirmthat the Group’s key controls are appropriate to mitigate thefinancial reporting risks;

• a robust control process is followed as part of interim andannual financial statements preparation, involving theappropriate level of management review and attestation ofthe significant account line items, and where judgements andestimates are made, they are independently reviewed toensure that they are reasonable and appropriate. This ensuresthat the consolidated financial information required for theinterim and annual financial statements is presented fairly anddisclosed appropriately;

• the Annual Report and Interim Report are also subject todetailed review and approval through a structuredgovernance process involving senior and executive financepersonnel;

• summary and detailed papers are prepared for review andapproval by the CAC covering all significant judgemental andtechnical accounting issues, together with any significantpresentation and disclosure matters; and

• user access to the financial reporting system is restricted tothose individuals that require it for their assigned roles andresponsibilities.

Reviews by the CourtThe effectiveness of the risk management and internal controlsystems is reviewed regularly by the Court, the CAC and theCourt Risk Committee, which also receive reports of reviewsundertaken by Group Risk and GIA. The CAC receives reportsfrom the Group’s external auditor (which include details ofsignificant internal control matters that they have identified), andhas separate discussions with the external and internal auditorsat least once a year without executives present, to ensure thatthere are no unresolved issues of concern.

The Group’s risk management and internal control systems areregularly reviewed by the Court and are consistent with theGuidance on Risk Management, Internal Control and RelatedFinancial and Business Reporting issued by the FinancialReporting Council and compliant with the requirements of CRDIV. They have been in place for the year under review and up tothe date of the approval of the annual report. The Group hasdetermined a pathway to compliance with the Basel Committeeon Banking Supervision (BCBS) 239 risk data aggregation andrisk reporting requirements and continues to actively manageenhancements.

Continuous improvementThe Group’s controls frameworks are continuously improved andenhanced, addressing known issues and keeping pace with thedynamic environment. Progress continues to be made inoperational (including IT and Information Security), regulatory andconduct risks. The 2019 internal control assessment provides

reasonable assurance that the Group’s controls are effective, orthat, where control weaknesses are identified, they are subject tomanagement oversight and action plans. The CAC, in conjunctionwith the Court Risk Committee, following an assessment ofwhether the significant challenges facing the Group areunderstood and are being addressed, concluded that theassessment process was effective and made a positiverecommendation to the Court in that regard.

Court Governance

Conflicts of InterestThe Court has an approved Conflicts of Interest Policy which setsout how actual, potential or perceived conflicts of interest are tobe identified, reported and managed to ensure that Directors actat all times in the best interests of the Group. This policy isreviewed on an annual basis.

The Group Code of Conduct, which applies to all employees andDirectors of the Group, clarifies the duty on all employees toavoid conflicts of interests. The Code of Conduct is reviewed onan annual basis and communicated throughout the Group.

Time CommitmentThe Group ensures that individual Court Directors have sufficienttime to dedicate to their duties, having regard to applicableregulatory limits on the number of directorships which may beheld by any individual Director. The Company and the Bank haveeach been classified as ‘significant institutions’ under CRD IV.During the year ended 31 December 2019, all Directors werewithin the directorship limits set out for significant institutionsunder the Regulations.

All newly-appointed Directors are provided with a comprehensiveletter of appointment detailing their responsibilities as Directors,the terms of their appointment and the expected timecommitment for the role. A copy of the standard terms andconditions of appointment of NEDs can be inspected duringnormal business hours by contacting the Group Secretary.Directors are required to devote adequate time to the business ofthe Group, which includes attendance at regular meetings andbriefings, preparation time for meetings and visits to businessunits. In addition, NEDs are normally required to sit on at leastone Court Committee, which involves the commitment ofadditional time. Certain NEDs, such as the Deputy Governor, SIDand Committee Chairs, are required to allocate additional time infulfilling those roles.

Before being appointed, Directors disclose details of their othersignificant commitments along with a broad indication of the timeabsorbed by such commitments. Before accepting any additionalexternal commitments, including other directorships that mightimpact on the time available to devote to their role, the agreementof the Governor and the Group Company Secretary, or,depending on the nature of the proposed commitment, the fullCourt, must be sought. In certain cases, advanced CBI approvalmust also be sought.

Term of Appointment and Re-election of DirectorsNEDs are normally appointed for an initial three-year term, withan expectation of a further term of three years, assumingsatisfactory performance and subject to the needs of thebusiness, shareholder re-election and continuing fitness andprobity.


19



A NED’s term of office will generally not extend beyond nine yearsin total unless the Court, on the recommendation of the GroupNomination and Governance Committee, concludes that suchextension is necessary due to exceptional circumstances. In sucha situation the Court will document its rationale for anycontinuance and so advise the CBI in writing as required underthe Irish Code.

In respect of Executive Directors, no service contract existsbetween the Company and any Director which provides for anotice period from the Group of greater than one year. None ofthe NEDs have a contract of service with the Group.

It is Group practice that, following evaluation, all Court Directorsare subject to annual re-election by stockholders. All Directorsretired at the AGC held on 14 May 2019. The following Directors,being eligible, offered themselves for election and were elected atthe 2019 AGC:• Ian Buchanan.• Evelyn Bourke.• Richard Goulding.• Patrick Haren.• Andrew Keating.• Patrick Kennedy.• Francesca McDonagh.• Fiona Muldoon.• Patrick Mulvihill.• Steve Pateman.

The names of Directors submitted for election or re-election areaccompanied by sufficient biographical details and any otherrelevant information in the AGC documentation to enableshareholders to take an informed decision on their election. The2020 AGC is scheduled for 19 May 2020 and, in line withprevious AGCs, all directors will retire from office at the date ofthe AGC and may choose to offer themselves for election.

Organisational StructureThe Group believes it has robust governance arrangements,which include a clear organisational structure with well defined,transparent and consistent lines of responsibility, effectiveprocesses to identify, manage, monitor and report the risks towhich it is or might be exposed, and appropriate internal controlmechanisms, including sound administrative and accountingprocedures, IT systems and controls. The system of governanceis subject to regular internal review. These governancearrangements provide systems of checks and controls to ensure

accountability and drive better decision-making, and also includepolicies and practices which ensure that the Court and itsCommittees operate effectively.

The Group’s overall control systems include a clearly definedorganisation structure with defined authority limits and reportingmechanisms to higher levels of management and to the Court,which support the maintenance of a strong control environment.Corporate and capital structure is a matter requiring Courtapproval. In accordance with section 225(2) of the CompaniesAct 2014, the Directors acknowledge that appropriate structuresthat are, in the Directors' opinion, designed to secure materialcompliance with the relevant obligations (as defined in section225(1)) have been put in place. The Court reviews annually thecorporate legal structure of the Group and any changes to thestructure of the Group effected since the Court’s previous review.

Subsidiary GovernanceThe interaction between the Court and the boards of ourstrategically significant subsidiaries are closely monitored. TheGovernor meets regularly with the Chairmen of these subsidiariesin order to ensure good communication and alignment andattends a number of subsidiary boards meetings during the year.The Court receives reports conducted on the effectiveness ofthese significant subsidiaries. Ian Buchanan is also a NED ofBank of Ireland (UK) plc and a member of its risk committee.

The Chairs of Court Committees attend the equivalentcommittees of the strategically significant subsidiaries once ayear. Similarly, the respective subsidiary board committee chairsattend and present at the Group Court Committees annually toprovide an account of the subsidiary board committees activities.

In 2019, the Court reviewed the Group Subsidiary GovernancePolicy including the New Subsidiary / Entity process document,which sets out the required procedure should any party in theGroup wish to set up a new Group subsidiary or entity in whichthe Group will have a controlling interest. This is reviewedannually.

The Group’s corporate simplification programme, designed toremove a number of subsidiaries from the Group, madeconsiderable progress in 2019 with the dissolution of 11companies. The purpose of this programme is to simplifycorporate structure of the Group with a view to generatingefficiencies and cost savings and reducing risk.

Report of the Court Nomination and Governance Committee

Patrick KennedyChair

Dear Shareholders,

Membership and meetings

At close of business on 31 December 2019, theCourt Nomination and Governance Committee (the‘Committee’) comprised Patrick Kennedy, PatrickHaren, Evelyn Bourke and Fiona Muldoon.Biographical details, including each member’sbackground and experience, are set out on pages22 to 25.

The Committee met six times during 2019, five ofwhich were scheduled meetings. The Chair andMembers of the Committee, together with theirattendance at meetings, are shown below. TheGroup CEO, Chief People Officer and othermembers of management are invited to attendmeetings where the agenda item is relevant to themand their attendance is requested by theCommittee. The Committee meets annually with nomanagement present.

Role and responsibilities

The key responsibilities of the Committee are set outin its terms of reference (which are available onwww.bankofireland.com) and include:• leading the process for appointments and

renewals for Court and Court Committees asappropriate, and making recommendations inthis regard to the Court for its approval;

• ensuring plans are in place for orderlysuccession to both the board and seniormanagement positions, and oversee thedevelopment of a diverse pipeline forsuccession;

• keeping Court governance arrangements underreview and making appropriaterecommendations to the Court to ensurecorporate governance practices are consistentwith good practice corporate governancestandards;

• overseeing subsidiary governance to ensure thatappropriate and proportionate governancearrangements are in place for Groupsubsidiaries; and

• agreeing the Group’s RSB policy and overseeingits implementation.

Matters considered by the CommitteeThe principal matters considered, and actions takenby the Committee during the year are described onpages 38 and 39.

Court Nomination and Governance Eligible Committee Meetings to attend Attended Patrick Kennedy 6 6Patrick Haren 6 6Evelyn Bourke 6 5Fiona Muldoon1 5 5

Court Composition, Succession and Diversity The Committee continued to keep under review thestructure, size and composition of the Court and itsCommittees. During 2019 the Committee devotedconsiderable time to succession planning andrecruitment, having regard to the tenures of anumber of its directors to ensure readiness andappropriate and timely succession activities. Furtherdetails are set out on page 28.

The Committee engaged Leaders Mores, aconsulting company specialising in board levelappointments, to support Director searchesconducted during the year and considered anumber of potential candidates, leading to thesuccessful appointment of Eileen Fitzpatrick.

In addition, the Committee considered the nomineeof the Minister for Finance, Michele Greene, whowas subject to the same level of consideration andsuitability review by the Committee as applied to allother NEDs. Leaders Mores supported the Courtwith an independent assessment of MicheleGreene’s suitability as part of the wider duediligence assessment, prior to her beingrecommended by the Court for appointment.

An active search is underway to identify a NED withtechnology transformation experience, withadditional ideal traits including financial servicesexperience and Irish residency. Leaders Mores andMWM Consulting are facilitating this search. Otherthan in connection with the Court searches, LeadersMores and MWM Consulting have no connectionwith the Group.

The selection of Myles O’Grady as the preferredcandidate to succeed Andrew Keating as CFO andExecutive Director was led by the CEO andsupported by the Committee.

As part of the process of succession planning anddetermining the appropriate range and mix of skills

1 Appointed 20 January 2019


20



21

Report of the Court Nomination and Governance Committee (continued)

Matters considered and action taken by the Committee in 2019

Key issue Committee considerations Committee conclusion

CourtComposition,renewal,succession andeffectiveness

• Court skills assessment, composition, diversity, size,tenure, succession planning.

• Committee composition and succession planning.• NED recruitment and appointments, including Fitness

and Probity assessments.• Effectiveness Reviews of Court, Governor and

Individual Directors.

Court appointments during the year were made to enhance thecomposition, diversity and skills profile of the Court, replacing skillsof retiring Directors and introducing additional skills, experienceand perspectives that equip the Court to address the strategicchallenges facing the Group.

Having regard to the requisite skillsets of each Court Committeeand Members’ Tenures, the Committee recommended theappointment of:• Michele Greene to the Risk Committee and GTOC; • Eileen Fitzpatrick to the Audit and Remuneration Committees;• Steve Pateman as Chair of the Remuneration Committee.

The 2018 internal effectiveness review concluded in January 2019and the 2019 external effectiveness review concluded in January2020; both reviews were positive of the Court and its Committees.

required to maintain an effective Court, each member of theCourt is requested to self-assess against the skills template setout in the Joint ESMA and EBA Guidelines on the assessment ofthe suitability of members of the management body and keyfunction holders. This assessment provided the Committee withvaluable analysis of the skills and experience of Court members,relative to required and desirable Court competencies, andcontributes to ensuring that the Court continues to have anappropriate range and depth of skills and experience.

While potential candidates were assessed against developedcandidate specifications for particular identified roles and skillsets, potential candidates were also required to be of sufficientcalibre and suitable for appointment to the Court as NED andenhance the Court’s overall effectiveness, facilitating the Court byacting with integrity, leading by example and promoting thedesired customer-focused culture.

The Group recognises the benefits of having a diverse Court andworkforce, creating a work environment where everyone has anopportunity to fully participate in creating business success, andwhere each person is valued for his or her distinctive skills,experiences and perspectives. In reviewing Court compositionand identifying suitable candidates, the Committee considers thebenefits of all aspects of diversity including the skills identified asrelevant to the business of the Group, regional and industryexperience, social and ethnic backgrounds, gender, age andother relevant cognitive and personal qualities in order tomaintain an appropriate range and balance of skills, experienceand background on the Court. All Court appointments are madeon merit, in the context of the skills, experience, independenceand knowledge which the Court as a whole requires to beeffective.

Executive • Senior Executive succession planning andappointments, including Fitness and Probityassessments.

• GEC Appointments and Group Structure Changes. • Assessment of Suitability of Key Function Holders

and MRTs.• Individual Accountability Regime Developments.• Gender diversity of leaders and senior managers.

The Committee supported the Group CEO’s proposedappointments in 2019 to the key roles of Chief People Officer, ChiefStrategy Officer, CFO, Group Secretary and CEO Retail (UK). Adeep dive of executive succession planning for key roles wasundertaken with the Court, which evidenced positive focus anddevelopment by the Group CEO, supported by the Chief PeopleOfficer, on succession planning and development of key talentduring 2019.


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Governance andcorporateresponsibility

• Annual Corporate Governance Statement.• Matters Reserved to Court and delegations.• Code of Conduct.• Group Speak Up Policy.• Group Conflicts of Interests Policy.• Updates to key corporate governance codes and

regulations, including 2018 UK Code, EBA Guidelineson Internal Governance and Joint ESMA and EBAGuidelines on the assessment of the suitability ofmembers of the management body and key functionholders.

• Consideration of actions to enhance workforceengagement.

• Key Court Governance Policies.• Approval of Governance Disclosures.• Modern Slavery Statement for 2018.

The Committee approved changes to internal Polices to ensurecontinued compliance with all applicable corporate governancerequirements. The Group’s Code of Conduct and Speak Up policieswere considered and changes agreed to ensure they remainedappropriate. The external communication of the Group’s corporategovernance standards through disclosures and the annual reportwas approved.

The Committee considered and recognised the strength of themechanisms in place to engage with and hear from colleagues butagreed that a further positive action to appoint a workforceengagement director should be taken. A recommendation wasmade to the Court and Eileen Fitzpatrick was designated as theWorkforce engagement NED in January 2020.

Matters considered and action taken by the Committee in 2019 (continued)



Policies • Court Terms of Reference.• Court Conflicts of Interest Policy.• Director Assessment Policy • Board Diversity Policy.• Court Training and Induction Policy.• Group Fitness and Probity and Suitability

Assessment Policy

The Committee approved proposed amendments to the policies toensure that the key board policies remained appropriate andeffective.

SubsidiaryGovernance

• Appointments to boards of substantial regulatedsubsidiaries.

• Subsidiary Governance Policy and Guidelines.• Review of composition and succession plans of key

subsidiary Boards.• Review of effectiveness of key subsidiary Boards.• Pension Scheme trustee appointments.

The Committee ensured that the boards of subsidiaries are properlycomposed with suitable directors and have sound governancestructures, and that Group oversight of subsidiaries remainedappropriate.

CommitteeGovernance

• Committee Effectiveness Review• Committee Terms of Reference

The Committee recommended amendments to its terms ofreference to ensure continued compliance with evolving corporategovernance requirements. The Committee considered the outcomeof the external review of the Court’s effectiveness as it relatedspecifically to the Committee. A positive outcome with regard tothe Committee’s continued effectiveness was reported.



23


During 2019 the Committee reviewed the Court Diversity Policy(the latest version of which is available on the Group’s website)and the measurable objectives set out thereunder. The Court hasset a target of achieving a minimum of 33% female representationon the Court for the year ending 31 December 2020, with amedium-term aspiration to have broadly equal genderrepresentation. As at 31 December 2019 there was 45% femalerepresentation on the Court, which reduced to 42% in January2020, following the appointment of Myles O’Grady to the Court.

In 2019, the Group made further progress in addressing diversityin the Group’s workforce through its Inclusion and DiversityProgramme, which recognises that developing and utilising theskills and perspectives of all our employees is critical to theGroup’s ongoing business success. While considering SeniorExecutive succession planning, the Committee and the Courtensured that diversity in its widest sense was at the forefront ofrelated considerations.

Governance matters

The Committee keeps under review updates to corporategovernance regulations and requirements and briefs the Court on

their effective implementation. In 2019, the Committee oversawthe final implementation of the 2018 UK Code, many provisions ofwhich were in place in advance of the required date of 1 January2019. As reported earlier, the Committee is being renamed as theNomination, Governance and Responsible Business Committeeand its terms of reference are being updated to reflect its widerremit in relation to RSB.

Effectiveness Reviews

The Committee oversaw the 2018 internal review of theeffectiveness of the Court and its Committees, including theCourt Nomination and Governance Committee, which concludedin January 2019, and the 2019 external review conductedexternally by Praesta Ireland, which concluded in January 2020.For further details, see page 30.

The Chair reports to the Court after each meeting to ensure allmembers are fully informed of its committee’s activities anddecisions.

Patrick KennedyChair of the Court Nomination and Governance Committee

21 February 2020


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Report of the Court Remuneration Committee

Patrick HarenChair(stood down January 2020)

Dear Shareholders,

Membership and meetings

At close of business on 31 December 2019, theCourt Remuneration Committee (the ‘Committee’ orthe ‘CRC’) comprised four independent NEDs fromdiverse backgrounds to provide a balanced andindependent view on remuneration matters. Itscomposition is compliant with the requirements ofthe Irish Code and CRD IV, and with therecommendations of the 2018 UK Code.

I stood down from the Committee in January 2020,having been Chair since May 2015. My colleague,Steve Pateman, who joined the Committee inSeptember 2018, was appointed Chair in January2020. I would like to take this opportunity to wishSteve well as he takes on this role.

In order to ensure that remuneration policies andprocedures are consistent with effective riskmanagement, there is common membershipbetween the CRC and the Court Risk Committee.Kent Atkinson, Richard Goulding and StevePateman were members of both Committees in2019. Kent Atkinson stood down from theCommittee, following his resignation from the Groupand Eileen Fitzpatrick joined the Committee during2019. Biographical details, including each member’sbackground and experience, are set out on pages22 to 25.

The CRC met 7 times in 2019. The Members of theCRC, together with their attendance at meetings,are shown below. The Governor, the Group ChiefExecutive, Chief People Officer, CRO, and the Headof Reward are invited to attend meetings asappropriate.

Role and responsibilities

The CRC holds delegated responsibility from theCourt of Directors for the oversight of Group-wideremuneration policy with specific reference to theGovernor, Directors and senior management, headsof and senior officers in independent controlfunctions, and those employees whose activitieshave a material impact on the Group's risk profile.

The CRC is responsible for overseeing the annualreview of the Group Remuneration Policy with input

from the Court Risk Committee and relevant riskmanagement functions.

The remuneration of NEDs is determined by a BoardCommittee of the Governor and the ExecutiveDirectors within the boundaries of the Bank’sconstitution. No Director is involved in decisionsregarding their own remuneration. The remunerationof the Chairman is a matter for the Committee.

The Group is currently operating under a number ofremuneration restrictions which cover all Directors,senior management, employees and certain serviceproviders across the Group. For further information,please see page 98 of the Remuneration Report inthe BOIG plc Group Annual Report 2019.

Mercer Kepler, advisors to the Committee, WillisTowers Watson and Deloitte provided remunerationadvice during 2019. The Committee is of the viewthat they provided independent remuneration adviceto the Committee and they do not have anyconnections with the Group that may impair theirindependence.

Matters considered by the Court RemunerationCommittee

The matters considered and action taken by theCRC during the year are set out on the followingpage. The Committee reviews and challengesinformation provided by management and takesadvice from external advisors, as appropriate TheCommittee ensures at all times to exerciseindependent judgment and makes informeddecisions.

The Chair of the CRC reported to the Court aftereach meeting to ensure all Directors were fullyinformed of the CRC’s activities.

Court Remuneration Eligible Committee Meetings to attend Attended Patrick Haren 7 7Kent Atkinson1 3 3Eileen Fitzpatrick2 4 4Richard Goulding 7 7Steve Pateman 7 7

1 Kent Atkinson stood down 14 May 2019.2 Eileen Fitzpatrick joined 15 May 2019.


25


Report of the Court Remuneration Committee (continued)


RemunerationPolicy, includingimpact of riskprofile.

• Approval of Group Remuneration Policy and ofgovernance and monitoring of that policy.

• Review of Group risk profile and implications ofremuneration policies for risk and risk management.

• Design of a potential incentive scheme, includingscope, reflection of risk, and application at variouslevels, including Executive Directors.

• Governance of potential incentive scheme.• Design of Organisational Balanced Scorecard.• Investor perspectives on potential incentive scheme.

• Current Remuneration Policy is properly governed andimplemented and does not lead to inappropriate risk taking.

• Any potential incentive scheme design will be subject to removalof relevant restrictions and shareholder approval.

RemunerationDisclosure

• Pillar 3 disclosures and the Remuneration Report(review and approval).

• Design of Remuneration Report and disclosures if anincentive scheme is introduced.

• Current disclosures are appropriate.• Future disclosures should reflect good practice and shareholder

expectations.

Performance andRemuneration ofSeniorManagement

• Objective setting and performance appraisal ofSenior Executives to inform the setting ofremuneration, including for heads of independentcontrol functions.

• Review of approach to remuneration of SeniorOfficers in independent control functions.

• Benchmarking and approval of changes toremuneration of Senior Executives.

• Review of Executive Director Remuneration Policy andpractice, with a view to clarity, simplicity, riskpredictability, proportionality, and alignment to culture.

• There is an appropriate process in place to assess theperformance of Senior Executives.

• Changes to Senior Executive remuneration are properlyassessed and approved.

Governance andreview ofremunerationpractice.

• Approval of the Group Remuneration Policy• Approval of Group MRT Policy.• Approval of Group MRT list.• Approval of remuneration of Heads of and Senior

Officers in Independent Control Functions.• Review of workforce remuneration, top earners, staff

with specific Minister for Finance approvals andcompliance with remuneration restrictions.

• Review of regulatory developments.• Review of internal audits relevant to remuneration

policy or practice.

• There is good governance around remuneration, particularly ofExecutive Directors, Senior Management and those who couldmaterially impact the Group’s risk profile.

NED fees • Review and benchmarking of fees paid to the GroupChairman and NEDs of subsidiary boards.

• Group Governor fees are subject to the remuneration restrictionsand remain unchanged

• Subsidiary NED fees are appropriate.

CommitteeGovernance

• Review of Committee Terms of Reference andeffectiveness.

• The Committee considered the outcome of the external review ofthe Court’s effectiveness as it related specifically to theCommittee. A positive outcome with regard to the Committee’scontinued effectiveness was reported.

Patrick HarenChair of the Court Remuneration Committee(stood down January 2020)

21 February 2020



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Report of the Court Audit Committee

Patrick MulvihillChair

Dear Shareholders,

On behalf of the Court Audit Committee (the‘Committee’ or ‘CAC’), I am pleased to introduce thereport on the Committee’s activities during thefinancial year ended 31 December 2019.

At a high level, the Committee operates inconjunction with the Court Risk Committee toensure the Group operates a strong internal controlenvironment, with the Committee specificallyfocused on protecting the interests of theshareholders in relation to internal controls as theyrelate to financial reporting. The Committee alsoevaluates the independence and performance ofGIA and the External Auditor, KPMG, and considersand recommends the interim and annual financialstatements to the Board for approval.

During 2019, we had a number of changes to thecomposition of the Committee, with Kent Atkinsonstanding down on his retirement from the Court atthe 2019 AGC and Eileen Fitzpatrick joining us inMay 2019. Common membership between theCommittee and the Court Risk Committee ismaintained through the membership of PatrickMulvihill, Richard Goulding and Steve Pateman,which facilitates appropriate co-ordination andeffective governance across key areas of internalcontrol.

A number of key management changes took placeduring 2019, and the Committee welcomed SteveSanders as Interim Group Chief Internal Auditor,pending appointment of a permanent successor toSteve O’Regan who left the Group in July 2019, andMyles O’Grady as the Group Chief Financial Officer,succeeding Andrew Keating who left the Group inOctober 2019.

Further details on Committee Members, Committeemeetings and attendance at meetings during 2019are outlined on page 52.

While not intending to be an exhaustive list of theCommittee’s considerations and activities in 2019, anumber of areas that were subject to Committeefocus during the year are outlined below.

Group Internal Audit

In monitoring the activities and effectiveness ofGroup Internal Audit, the Committee approved theannual audit plan and budget, including resources,and reviewed progress against the plan throughoutthe year.

The Committee received regular reports from GroupInternal Audit on internal audit activities across theGroup which outline details of the audit approach,Management engagement and areas identified

during audits for further strengthening across theGroup’s risk management and internal controlframework. These reports cover matters ofrelevance to the Committee in assessing, theeffectiveness of the internal controls over thefinancial reporting processes. Reports are ratedbased on the strength of the control environment inoperation, Management’s awareness of the risksfacing their business areas, and the controls in placeto mitigate those risks. In conjunction with GroupInternal Audit reports, the Committee considersManagement’s responses to, and the timeliness ofthe remediation of, identified issues.

Having regard for Group Internal Audit activities andthe Committee’s review of the extent of the workundertaken by the Finance and Risk teams acrossthe Group, the Committee is satisfied that internalcontrols over financial reporting were appropriatelydesigned and operating effectively. Full details of theinternal control and risk management systems inrelation to the financial reporting process aredetailed within the risk management section onpages 110 to 160 of the BOIG plc Group AnnualReport 2019.

External audit

The Committee oversees the relationship withKPMG and, Niamh Marshall, KPMG’s lead auditpartner, attends all Committee meetings.During the year, the Committee considered KPMG’sterms of engagement (including remuneration), itsindependence, audit quality / performance,objectivity and considered the plans for the interimreview and year end audit. The Committee alsoassessed KPMG’s findings, conclusions andrecommendations arising from the interim reviewand year-end audit.

Appropriate safeguards are in place to protect theindependence and objectivity of KPMG. TheCommittee operates a policy to regulate the use ofKPMG for non-audit services, to ensure compliancewith the revised Ethical Standards for Auditors(Ireland) 2017 from the Irish Auditing AccountingStandards Authority (IAASA).

In order to ensure the objectivity and independenceof KPMG, the policy formalises certain restrictionson the provision of non-audit services by KPMG andrequires all non-audit services provided by theKPMG must be approved in advance by theCommittee. Additional provision is made for theapproval of non-material services which are belowthe threshold. Annually, details of expected non-audit services for the coming year are presented tothe Committee for approval. Any proposedadditional services exceeding these levels requireadditional specific pre-approval.


27


IFRS 9 andimpairment offinancialinstruments

The Committee reviewed management papers and discussed and challengedmanagement judgements used in determining the following based on IFRS 9requirements:• correct classification and measurement of financial instruments;• stage allocations and stock of impairment loss allowance (including any necessary

Group management adjustments to reflect model limitations and / or late breakingevents);

• model parameter updates incorporating forward looking information (FLI);• net impairment loss for the year; and • quantum of NPEs.

The Group’s approach to the measurement of impairment is set out in the GroupImpairment Policy. The policy includes the Group’s criteria for allocating financialinstruments to stages, the method used to measure impairment for each materialportfolio, core impairment model methodologies, and the criteria for classifying financialassets as NPEs. The policy has been approved by the Court on the recommendation ofthe Committee, following recommendation by the Impairment Committee and the GroupRisk Policy Committee (GRPC). The impairment models are approved for use by the RiskMeasurement Committee (RMC) and are maintained and executed by a specialist centralunit within Group Risk. The Committee reviewed the impact of key model changes madeduring the reporting period.

The Committee was satisfied that theclassification and measurement offinancial assets, stage allocations,model parameter updates (includingFLI), impairment loss allowances, andthe net impairment loss for thereporting year, had been appropriatelydetermined in accordancewith the Group’s methodologies andIFRS 9 accounting standard. TheCommittee was also satisfied that theassociated disclosures wereappropriate based on the relevantaccounting standards including IAS 1and IFRS 7.



Report of the Court Audit Committee (continued)

Retirementbenefitobligations

The Committee considered management’s key assumptions and judgements used indetermining the actuarial values of the liabilities of each of the Group’s sponsoreddefined benefit pension schemes under IAS 19 ‘Employee Benefits’. Managementconsidered advice from independent actuaries, Willis Towers Watson, for thedetermination of significant actuarial assumptions. The key assumptions proposed bymanagement and considered by the Committee were assumptions relating to inflationrates, demographics and discount rates in Ireland and the UK which are used indetermining liabilities at the reporting date.

The Committee was satisfied that theinflation rates, discount rates and othersignificant assumptions wereappropriate and that the accounting forthe Group’s sponsored defined benefitpension schemes and relateddisclosures was inaccordance with IAS 19.

The fees paid to KPMG for the year ended 31 December 2019amounted to €4.6 million (2018: €3.9 million), of which €1.1million (2018: €0.6 million) was payable in respect of non-auditservices. Non-audit services represented 24% of the statutoryaudit fee (2018: 15%). Further information on fees paid in respectof audit and non-audit services, along with details of non-auditservices provided during the year are set out in note 15 to theconsolidated financial statements ‘Auditor’s remuneration’.

The Committee concluded that it was satisfied with theindependence, quality and performance of KPMG andrecommended that the Board propose KPMG in respect of theyear ended 31 December 2019 for reappointment for approval atthe 2020 AGM.

Financial reporting

A key activity for the Committee is the consideration of significantmatters relating to the annual financial report, with keyaccounting judgements and disclosures subject to in depthdiscussion with Management and KPMG. The Committeeprovides robust challenge to key judgements in advance ofmaking a recommendation to the Board that all financial reportsare considered to be a fair, balanced and understandableassessment of the Group’s financial position.

Further information on some of these significant items is set outin the Critical Accounting Estimates and Judgements on pages90 to 93. Overall the Committee was satisfied that the 2019annual report, including the financial statements, is fair, balancedand understandable.


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Life assuranceaccounting

The Committee considered management’s key assumptions and judgements used indetermining the valuations of the Value of in Force (ViF) and insurance contract liabilities. The key assumptions in projecting future surpluses and other net cash flowsattributable to the shareholder arising from business written were the interest rate andunit growth rates, lapse rates, mortality, morbidity and expenses. Interest rates and unit-growth rates are based on a range of duration specific rates determined by a risk freeyield curve. This yield curve is provided by the European Insurance and OccupationalPensions Authority (EIOPA).

Whilst not relevant to the 2019 financial reporting period, the Committee also consideredthe future potential impact of IFRS 17.

The Committee was satisfied that thesignificant assumptions areappropriately applied and that theaccounting for the Group’s ViF andinsurance contract liabilities isappropriate.

Intangible assets- Capitalisationof theTransformationInvestment asset

The Committee considered the appropriateness of Management’s internal controls andgovernance surrounding the capitalisation of costs related to internally generatedintangible assets associated with the Transformation Investment asset.

The Committee was satisfied, based onthe effective operation of governanceand controls, that the capitalisation ofcosts relating to the TransformationInvestment asset, and the carryingvalue of the related intangible assets,was reasonable and in line with therequirements of IFRS.



Deferred taxation The Committee considered the extent of DTAs to be recognised in respect of unutilisedtax losses, and in particular the projections for future taxable profits against which thoselosses may be utilised. In order for the Group to recognise these assets, it must beprobable that sufficient future taxable profits will be available against which the lossescan be utilised.

The Group has prepared financial projections which are being used to support theGroup’s ICAAP. The financial projections are prepared for the purpose of the Group’sassessment of its capital adequacy. They are subjected to considerable internalgovernance at a divisional and Group level and are reviewed and approved by executivemanagement and the Court. Management’s assessment of the projections determinedthat it was probable that there would be sufficient taxable profits in the future to recoverthe DTA recognised arising from unused tax losses.

In relation to DTAs arising from Irish tax losses carried forward by the Bankmanagement’s assessment of the projections determined that it was probable that therewould be sufficient taxable profits in the future to recover the DTA of €1,088 millionarising from those tax losses.

In relation to Bank of Ireland (UK) plc, notwithstanding its continued profitability and theGroup’s commitment to the UK, updated profit projections indicate an increase in theprojected DTA recovery period. In consideration of this, management proposed torestrict the recovery period of the DTA in Bank of Ireland (UK) plc to ten years.

As a consequence, the carrying value of the DTA relating to trading losses of Bank ofIreland (UK) plc was reduced by €45 million, to €35 million, in the year ended 31December 2019.

The Committee discussed withmanagement its assessment of therecoverability of the DTA and therelated disclosures. The Committee andthe Court concluded that it wasprobable that there would be sufficienttaxable profits in the future to recoverthe DTAs recognised arising fromunused tax losses, and that the relateddisclosures were as required under IAS12 ‘Income Taxes’.


29





IT risk The Committee considered and discussed management’s assessment of IT risks and theongoing risk management programme to identify, rate, mitigate and report on IT risks,including GIA and the KPMG’s reviews.

On the basis of the review performed,discussions with management, and thecontinued operation of thecomprehensive internal controlframework over financial reporting, theCommittee was satisfied that theserisks did not impact financial reportingprocesses.

Going concern The Committee considered management’s assessment of the appropriateness ofpreparing the financial statements of the Group for the year ended 31 December 2019 ona going concern basis. In making this assessment, matters considered included theperformance of the Group’s business, profitability projections, funding and capital plans,under both base and plausible stress scenarios. The considerations assessed by theCAC are set out on page 74 in the Going Concern disclosure within the AccountingPolicies in note 1 to the consolidated financial statements.

On the basis of the review performedand the discussions with management,the Committee was satisfied that therewere no material uncertainties relatedto events or conditions that may castsignificant doubt on the Group’s abilityto continue as a going concern over theperiod of assessment. This assessmenttogether with the Going Concerndisclosure (as set out on page 74) wassubsequently approved by the Court.

IFRS 16 The Committee considered the impact of IFRS 16 ‘Leases’ which came into effect on 1January 2019, replacing IAS 17 ‘Leases’ and related interpretations. It addresses thedefinition of a lease, recognition and measurement of leases and establishes principlesfor reporting useful information to users of financial statements about the leasingactivities of both lessees and lessors. A key change arising from IFRS 16 is that alloperating leases are accounted for on balance sheet for lessees. The accounting forlessors has not materially changed.

The Committee’s objective was to ensure the impact of IFRS 16 was appropriatelyreflected in the financial statements, including an update to relevant accounting policiesand new disclosures. Key judgements included the choice of implementation option, theuse of practical expedients and judgements in relation to lease terms and incrementalborrowing rates.

The Committee was satisfied that theapproach / impact of transition to IFRS 16 had been appropriatelydetermined and that the associatedjudgements / disclosures wereappropriate based on the relevantaccounting and disclosurerequirements, contained in IFRS 16.

ViabilityStatement

In accordance with the requirements of the UK Code, the CAC considered whether it hada reasonable expectation that the Group will be able to continue in operation and meetits liabilities as they fall due over the period of their assessment and made arecommendation to the Board in that regard. This required a robust assessment of theprincipal risks facing the Group, including those that would threaten its business modeland future performance, solvency and liquidity.

CAC concluded that a robustassessment of the principal risks facingthe Group, including those that wouldthreaten its business model, futureperformance, solvency or liquidity, andthat there was a reasonableexpectation that the Group would beable to continue in operation and meetits liabilities as they fall due over theperiod of their assessment. The Groupadopted a three-year period, havingregard to existing relevant process andframeworks which are performed overtime periods ranging from six months tothree years.


30


Other matters

The Committee also: • received reports from the Group’s Money Laundering

Reporting Officer on the operation and effectiveness of thesystems and controls established by the Group to manageFinancial Crime Compliance (FCC) risk. FCC incorporatesmoney laundering, terrorist financing, sanctions and briberyand corruption and is a key area of Committee focus;

• received reports from Group Compliance on matters relatingto Regulatory Risk and Conduct Risk profiles;

• dedicated time to review and oversee a number of keyprogrammes with potential financial reporting impacts suchas the EU General Data Protection Regulation and the BaselCommittee on Banking Supervision Principles for EffectiveRisk Data Aggregation and Risk Reporting (BCBS 239); and

• reviewed talent development in and succession planning forthe finance function.

A full list of responsibilities are detailed in the Committee’s termsof reference, which can be found athttps://www.bankofireland.com/about-bank-of-ireland/corporate-governance/.

Committee membership and meetings

The Committee acts independently of the Executive. All membersof the Committee are independent NEDs with relevantcompetence in the financial sector, and their biographies can befound on pages 22 to 25. The members of the Committee haveextensive knowledge of financial markets, treasury, riskmanagement and international accounting standards, and theCommittee’s composition is considered to meet all of theapplicable requirements, including the need for recent andrelevant financial experience and competence in accounting orauditing.

The members of the Committee maintain their knowledge baseon relevant Committee matters, through Court deep dives anddedicated Committee training. During 2019, the Committee

received training on the net interest income reporting process,forthcoming changes regarding the implementation of IFRS 17,which will introduce an updated reporting standard for insurancecontracts, and the impact of new accounting standards whichcame into effect during 2019, including IFRS 16 ‘Leases’ (furtherdetails of which are provided in this report).

Details of the Committee members’ meeting attendance areshown below.

Court Audit Eligible Committee Meetings to attend Attended Kent Atkinson1 2 1Evelyn Bourke 7 6Eileen Fitzpatrick2 5 5Richard Goulding 7 7Patrick Mulvihill 7 7Steve Pateman 7 6

The Group Chief Financial Officer, the Head of Group Finance, theGroup Chief Internal Auditor, the Group’s lead audit partner theGroup Chief Executive Officer, and the Group Chief Risk Officerattend meetings of the Committee as appropriate.

The Committee also holds individual private sessions with eachof the Internal and External Audit teams (without other membersof the executive management being present) and the Group’sChief Financial Officer during the year.

An external effectiveness evaluation of the Board was conductedduring 2019, and, as part of that process, a positive outcome withregard to the Committee’s continued effectiveness was reported. The Committee reports to the Board on how it discharges itsresponsibilities and makes recommendations to the Board on keymatters.

Patrick MulvihillChair of the Court Audit Committee

21 February 2020

1 Kent Atkinson stood down in May 2019. 2 Eileen Fitzpatrick joined in May 2019.


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Report of the Court Risk Committee

Richard Goulding Chair

Dear Shareholders,

The Court Risk Committee (the ‘Committee’) givesdetailed consideration to existing and emerging risks,through a balanced agenda which ensures sufficientfocus on standing areas of risk management throughthe Group Risk Framework, together with specificattention being given to those emerging risks whichare considered to be of ongoing importance to theGroup and its customers.

On existing risks, there was significant focus on thenon-financial risk areas of operational risk, conductrisk and regulatory risk. The Court Risk Committeehas overseen the establishment of a non-financial riskimprovement programme to uplift the Group’soperational risk framework and capability, proactivelyidentify and resolve conduct issues and enhancemanagement of regulatory risk. There has been aparticular focus on operational risk arising fromchange programmes. Further progress across eachof these areas will be a key ongoing focus for theCommittee during 2020.

Emerging risks included areas such as transformationrisk, data management, IT resilience and cybersecurity, where the dynamic nature and significanceof related risks and challenges continue to evolve.

The environment within which the Group operatescontinues to be subject to considerable change.Uncertainties, including the consequences of the UKexit from the EU and wider geo-political riskscontinue to provide challenges, and the Court RiskCommittee will continue to monitor developmentsand any associated impact on the Group’s riskprofile.

The Court Risk Committee concluded that the Groupcontinues to have strong discipline in themanagement of both emerging and existing financialrisks and is satisfied with the level of focus beingapplied to ensure continuing strengthening of non-financial risk management.

Risk Management - Discussions and Decisions

Key matters covered included:• recommending the Group’s Risk Appetite

Framework and Risk Appetite Statement.Considering breaches of risk appetite,remediation plans and required communications;

• recommending policies for Credit, Market andLiquidity risks and approving other key riskpolicies;

• regularly assessing the Group’s overall risk profileand emerging risk themes, hearing directly fromthe Group CRO and regularly reviewing theconsolidated risk report and risk appetitedashboard;

• receiving reports on the Group’s operational andtechnology capability, including specific updateson cyber risk capability, IT resilience, IT ServiceContinuity Management (ITSCM), and DataManagement;

• recommending the Group’s plan for managingNPEs, a key driver of managing legacy credit risk,and reviewing the risk aspects of NPE sales;

• recommending the Group’s 2019 ICAAP, ILAAPand Recovery Plan; and

• hearing from representatives of the ECB and CBIregulators about regulatory expectations andtheir specific views on the Group.

Committee purpose and responsibilities

The Committee is responsible for the risk culture ofthe Group and setting the tone from the top inrespect of risk management. It is also responsible forensuring the risk culture is fully embedded andsupports at all times the Group’s agreed risk appetite,covering the extent and categories of risk which theCourt considers acceptable for the Group.

In seeking to achieve this, the Committee assumesresponsibility for monitoring the Group’s RiskManagement Framework, which embraces riskprinciples, policies, methodologies, systems,processes, procedures and people. It also includesthe review of new, or material amendments to, riskprinciples and policies, and overseeing any actionresulting from material breaches of such policy.More details on the Group’s wider approach to riskmanagement can be found in the risk managementreport on pages 110 to 160 of the BOIG plc GroupAnnual Report 2019. Full details of the Committee’sresponsibilities are set out in its terms of reference,which can be found athttps://www.bankofireland.com/about- bank-of-ireland/corporate-governance/.

Committee composition, skills and experience

The Committee is composed of NEDs, who providecore banking skills and risk knowledge, together withbreadth of experience which brings knowledge fromother sectors, and a clear awareness of theimportance of putting the customer at the centre ofall that the Group does.

The Group CRO has full access to the Committeeand normally attends meetings. The Group ChiefInternal Auditor and members of the Executive alsoattend meetings, as appropriate.

During the year the Committee met its key objectivesand carried out its responsibilities effectively. Detailsof Committee membership and meeting attendanceare shown below.

Court Risk Eligible Committee Meetings to attend Attended Kent Atkinson1 3 3Ian Buchanan 8 8Richard Goulding 8 8Michele Greene2 - -Fiona Muldoon 8 8Patrick Mulvihill 8 8Steve Pateman 8 8

1 Kent Atkinson stood down in May 2019. 2 Michele Greene joined in December 2019.


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Report of the Court Risk Committee (continued)

Credit Risk Credit quality continues to improve as the Group’s keyeconomies perform strongly.

The Committee considered overall credit quality duringthe year and the Group’s strategy and operating plan forNPEs. The Committee also reviewed the risk aspects ofNPE sales, residual risk in the motor finance portfolio,sectors most exposed to Brexit and concentrations inthe mortgage portfolio.

Credit portfolios continue to perform well. NPEs continue todecrease in line with the approved NPE strategy, albeit they remainhigher than long-term appetite.

Capital Adequacy Regular reviews are undertaken to ensure thatRegulatory and Fully Loaded capital ratios haveappropriate buffers above the Group’s own minimumtargets and regulatory requirements. The Committeeconsidered the impacts of future capital requirementand capital availability and reviewed in detail the ICAAP,including under stress scenarios.

The Group holds sufficient capital to deliver its planning horizon.

Funding andLiquidity Risk

Regular reviews are undertaken to ensure that theGroup is compliant with all risk appetite measures andregulatory liquidity requirements. The Committeereviewed the results of regular stress testing and of theILAAP.

The Group continues to be fully compliant and has no issues withmarket access or pricing.

Market Risk Regular reviews are undertaken to ensure that theGroup is compliant with all risk appetite measuresacross credit spread risk, discretionary risk, VaR andscenario-based stress testing.

The Committee reviewed the results of regular marketrisk reporting and considered the impacts of emergingmarket developments including Brexit.

The Group continues to operate within risk appetite in this area.

Pension Risk The Group is exposed to Pension Risk as aconsequence of its sponsorship of the Group’s definedbenefit pension schemes. The key sensitivitiesassociated with Pension Risk are outside the control ofthe Group.

The Group continues to take asset and liability managementactions in order to reduce volatility and consequent capital impact.

The Group has made and continues to make progress.




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Operational Risk Managing operational risk continues to be a key focuswithin the Group due to the complexity and volume ofchange, the Group’s IT infrastructure, cyber risk andreliance on third party suppliers.

The Committee continues to focus on ensuring theGroup has an effective framework for managingoperational risk, including enhancing the use of key riskand control indicators and residual risk reporting. TheCommittee has considered a number of reports inrelation to operational risk framework across cyber, IT,sourcing, information security, data, and businesscontinuity.

The Group has made progress in its management of operationalrisk. The Group will continue to focus on enhancing the maturity ofthe framework during 2020.

Regulatory Risk Managing regulatory risk continues to be a key focusfor the Group due to the complexity and volume ofchange and interdependent regulatory reform to bemanaged.

The Committee continues to focus on ensuring thereare sufficient controls in place and oversight ofcompliance programmes.

The Group has placed significant focus on overseeing compliancewith regulatory requirements. Regulatory risk will remain a key areaof focus for the Committee in 2020 given the importance ofcontinued compliance.

Conduct Risk The Committee focused on the Group’s management ofconduct risk.

Throughout 2019, the Committee has consideredreports on the resolution of customer conduct issues,with a particular focus on tracker mortgages. The paceand quality of remediation remained a focus, includingroot cause analysis to establish lessons learned andhelp prevent similar issues in the future. The Committeecontinues to consider developments in the Group’sconduct culture as well as reports on rectificationprogrammes, complaints, and conduct risk appetitemetric performance.

While good progress has been made in 2019, ongoingimprovement in risk profile and embedding of conduct initiativeswill remain a priority for the Group in 2020, and a subject of focusfor the Committee.

Business andStrategic Risk

The Committee recognises the risks in delivering theagreed strategy, associated with the transformationagenda, customer expectations, and regulatory change.

The Group is engaged in a significant programme to transform theBank, serve customers brilliantly and grow sustainable profits. Itacknowledges the challenges faced with delivering this strategywhilst additionally enhancing systems and controls, and meetingregulatory change.

New performance measures have been introduced to enableperformance monitoring, risk management, and the assessment ofdelivery. These will be further developed and embedded during2020.




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IT andInformationSecurity

A resilient IT environment is critical to providing reliableservices to customers, and meeting current and futuredemands. The risk of cybersecurity attacks, whichtarget financial institutions and corporates as well asgovernments and other institutions, remains material astheir frequency, sophistication and severity continue todevelop in an increasingly digital world.

In conjunction with the GTOC (the committeeoverseeing the Group’s transformation programme), theCourt Risk Committee gave consideration to a widerange of issues, including cyber and IT controls,technology resilience and cybersecurity programmeupdates. The Committee also worked closely withGTOC, overseeing transformation to ensure appropriateprioritisation to risk management.

Whilst there has been significant improvement in cyber capability,IT resilience and transformation risk will remain areas of key focusduring 2020 as the Group continues to invest in its infrastructureand replace core systems.

Richard Goulding Chair of the Court Risk Committee

21 February 2020

Brexit Whilst progress has been made, Brexit carriesconsiderable uncertainty for our RoI and UK marketswith the shape of any final trade deal not yet clear.

The Brexit risks impacting the Group are credit risk, business andstrategic risk, and operating model risk. The Committee continuesto oversee the Group’s preparation and risk mitigations plans,which have been executed effectively.

People With a substantial transformation programme underway,a strongly performing economy in Ireland andremuneration restrictions in place, the Court RiskCommittee regularly reviewed the arrangements tomanage people risk.

In 2019 the risks were mitigated and managed. This will be a keyarea of focus during 2020.




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Attendance table

Attendance at scheduled meetings of the Court and its Committees during the year ended 31 December 2019.

Nomination and Audit Governance Remuneration Risk Court Committee Committee Committee Committee Name A B A B A B A B A B Kent Atkinson (resigned 14 May 2019) 3 3 2 1 - - 3 3 3 3Evelyn Bourke 8 8 7 6 6 5 - - - -Ian Buchanan 8 8 - - - - - - 8 8Eileen Fitzpatrick (appointed 15 May 2019) 5 5 5 5 - - 4 4 - -Richard Goulding 8 8 7 7 - - 7 7 8 8Michele Greene (appointed 5 December 2019) - - - - - - - - - -Patrick Haren 8 8 - - 6 6 7 7 - -Andrew Keating (resigned 18 October 2019) 7 7 - - - - - - - -Patrick Kennedy 8 8 - - 6 6 - - - -Francesca McDonagh 8 8 - - - - - - - -Fiona Muldoon 8 8 - - 5 5 - - 8 8Patrick Mulvihill 8 8 7 7 - - - - 8 8Myles O’Grady (appointed 15 January 2020) - - - - - - - - - -Steve Pateman 8 8 7 6 - - 7 7 8 8

Column A: Indicates the number of meetings held during the year the Director was a member of the Court and / or the Committee and was eligible to attend. Column B: Indicates the number of meetings attended.

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Documents

BOI Group Classification: Purple Highly ... - Bank of Ireland · The Governor and Company of the Bank of Ireland Annual Report 2019 5 Business Review Governance Financial Statements