Corporate Governance Practices
Corporate Governance arrangements and practices
With effect from 11 January 2016, AIB is subject to the requirements of the Central Bank of Ireland’s Corporate Governance Code for Credit Institutions (‘the Central Bank Code’), including requirements which specifically relate to ‘high impact institutions’ and additional corporate governance obligations on credit institutions which are deemed significant for the purposes of the European Union (Capital Requirements) Regulations 2014 (“CRD”) (which transposed the EU Capital Requirements Directive into domestic law).
The Company has also adopted the provisions of the UK Corporate Governance Code (the UK Code which is available on www.frc.org.uk).
AIB’s corporate governance practices also reflect Irish company law, the Listing Rules of the Enterprise Securities Market of the Irish Stock Exchange, CRD and, in relation to the UK businesses, UK company law.
Compliance with CRD
Regulation 84 of CRD requires institutions to explain, on their website, how they comply with the certain regulations contained in CRD. The document which sets out how AIB complies with the requirements of Regulations 76 to 83 of CRD, which relate primarily to Governance, Remuneration, and Reporting, can be found here.
The Board of Directors
The Board is responsible for corporate governance, encompassing leadership, direction and control of the Group, and is accountable to shareholders for financial performance. While arrangements have been made by the Directors for delegation of the management, organisation and administration of the Company’s affairs, the following matters are specifically reserved for decision by the Board:
to retain primary responsibility for corporate governance within the Company at all times and oversee the efficacy of governance arrangements;
to determine the Company's strategic objectives and policies, and to ensure that the necessary financial and human resources and operational capabilities are in place for the Company to meet its objectives;
to approve the annual financial plan, interim and annual financial statements, operating and capital budgets, major acquisitions and disposals, and risk appetite limits, designated frameworks and relevant policies;
to appoint the Chairman of the Board, Board Directors, Chief Executive Officer and Members of the Leadership Team, to address related succession planning, and to approve, where appropriate, the removal of persons in charge of Control Functions;
to endorse the appointment of people who may have a material impact on the risk profile of the Company and monitor on an ongoing basis their appropriateness for the role;
to render an account of the Company's activities to its shareholders;
to protect the assets of the Company taking into account the interests of the shareholders and the employees in general with appropriate regard for the interests of other stakeholders; and
to put in place and monitor procedures designed to ensure that the Company complies with the law and good corporate citizenship
The Board is responsible for approving high level policy and strategic direction in relation to the nature and scale of risk that AIB is prepared to assume in order to achieve its strategic objectives. The Board ensures that an appropriate system of internal controls is maintained and that effectiveness is reviewed.
Specifically the Board:
sets the Group’s Risk Appetite, incorporating risk limits
approves designated Risk Frameworks, incorporating risk strategies, policies, and principles;
approves stress testing and capital plans under the Group’s Internal Capital Adequacy Assessment Process (“ICAAP”)
approves other high-level risk limits as required by Credit, Capital, Liquidity and Market policies
The Board receives regular updates on the Group’s risk profile through the Chief Risk Officer’s monthly report, and relevant updates from the Chairman of the Board Risk Committee. An overview of the Board Risk Committee’s activities is detailed below at Board Committees.
AIB has received significant support from the Irish State (‘the State’) in the context of the financial crisis because of its systemic importance to the Irish financial system, as a result of which the State holds c.99.9% of the issued ordinary shares of the Company. The relationship between AIB and the State as shareholder is governed by a Relationship Framework. Within the Relationship Framework, with the exception of a number of important items requiring advanced consultation with or approval by the State, the Board retains responsibility and authority for all of the operations and business of the Group in accordance with its legal and fiduciary duties and retains responsibility and authority for ensuring compliance with the regulatory and legal obligations of the Group. The Relationship Framework is available here.
The Chairman’s responsibilities include the leadership of the Board, ensuring its effectiveness, setting its agenda, ensuring that the Directors receive adequate, accurate and timely information, facilitating the effective contribution of the Non- Executive Directors, ensuring the proper induction of new Directors, the on-going training and development of all Directors, and reviewing the performance of individual Directors.
Mr Richard Pym was appointed Chairman Designate on 13 October 2014 and assumed the role of Non-Executive Chairman with effect from 1 December 2014. In addition to his role as Chairman, Mr Pym is Chairman of the Nomination and Corporate Governance Committee and a Member of the Remuneration Committee. Mr Pym was formerly Chairman and Director of Nordax Bank AB (publ); he stood down from these roles on 15 October 2015 and 11 May 2016 respectively. He stood down from his position as Chairman of UK Asset Resolution Ltd (‘UKAR’) on 5 June 2016, remaining as a Director of UKAR, and related companies Bradford & Bingley plc and NRAM Limited, until he retired from these roles on 26 July 2016. Mr Pym currently has no other external directorship commitments. Mr Pym’s biographical details are available below at Board of Directors. The role of the Chairman is separate from the role of the Chief Executive Officer, with clearly-defined responsibilities attaching to each; these are set out in writing and agreed by the Board.
Dr Michael Somers was appointed as Deputy Chairman in June 2010. In addition to this role, Dr Somers is a Member of the Nomination and Corporate Governance Committee and the Board Risk Committee. Dr Somers was Chairman of the Board Risk Committee from 10 November 2010 until 27 January 2016. Dr Somers’ biographical details are below at Board of Directors.
Senior Independent Non-Executive Director
The Senior Independent Non-Executive Director is available to shareholders if they have concerns which contact through the normal channels of Chairman or Chief Executive Officer have failed to resolve, or for which such contact is considered by the shareholder(s) concerned to be inappropriate. Ms Catherine Woods was appointed Senior Independent Non-Executive Director with effect from 30 January 2015.
In addition to her role as Senior Independent Non-Executive Director, Ms Woods is Chairman of the Board Audit Committee and Member of the Board Risk Committee and the Nomination and Corporate Governance Committee. Ms Woods’ biographical details are available below at Board of Directors.
Independent Non-Executive Directors
As an integral component of the Board, Independent Non- Executive Directors represent a key layer of oversight of the activities of the Company. It is essential for Independent Non- Executive Directors to bring an independent viewpoint to the deliberations of the Board that is objective and independent of the activities of the management and of the Company. Biographical details for each of the Independent Non-Executive Directors are available below at Board of Directors.
Executive Directors have executive functions in the Company in addition to their Board duties. The role of Executive Directors, led by the Chief Executive Officer, is to propose strategies to the Board and following challenging Board scrutiny, to execute the agreed strategies to the highest possible standards. Biographical details for each of the Executive Directors are available below at Executive Leadership Team.
Chief Executive Officer
The Chief Executive Officer is responsible for the day-to-day running of the Group, ensuring an effective organisation structure, the appointment, motivation and direction of Senior Executive Management, and for the operational management of all the Group’s businesses. Mr Bernard Byrne was appointed Chief Executive Officer on 29 May 2015.
The Leadership Team is the most senior executive committee of the Group and is accountable to the Chief Executive Officer. Subject to financial and risk limits set by the Board, and excluding those matters which are reserved specifically for the Board, the Leadership Team under the stewardship of the Chief Executive Officer has responsibility for the day-to-day management of the Group’s operations. It assists and advises the Chief Executive Officer in reaching decisions on the Group’s strategy, governance and internal controls, and performance and risk management.
Joint Group Company Secretaries
The Directors have access to the advice and services of the joint Group Company Secretaries who are responsible for advising the Board through the Chairman on all governance matters, ensuring that Board procedures are followed and that applicable rules and regulations are complied with. The Group Company Secretaries facilitate information flows within the Board and its Committees and between Senior Executive Management and Non-Executive Directors, as well as facilitating induction and assisting with professional development as required. Mr David O’Callaghan was Company Secretary until 27 October 2016, at which point Mr Robert Bergin and Ms Sarah McLaughlin were appointed as joint Group Company Secretaries.
Board of Directors
Richard Pym, CBE - Non-Executive Chairman
Appointed: 13/10/2014 (Chairman Designate) 01/12/2014 (Chairman)
Background & Experience: Mr Pym was co-opted to the Board on 13 October 2014 as Chairman Designate and Non-Executive Director and was appointed Chairman with effect from 1 December 2014. Mr Pym is a Chartered Accountant with extensive experience in financial services having held a number of senior roles including Group Chief Executive Officer of Alliance & Leicester plc. He is a former Chairman of UK Asset Resolution Limited, the entity which manages, on behalf of the UK Government, the run off of the Government owned closed mortgage books of Bradford & Bingley plc and NRAM (No.1) Limited. Mr Pym is a former Chairman of Nordax Bank AB (publ), The Co-operative Bank plc, BrightHouse Group plc & Halfords Group plc. He is a former Non-Executive Director of The British Land Company plc, Old Mutual plc and Selfridges plc.
Committee membership(s): Chairman of the Nomination and Corporate Governance Committee and member of the Remuneration Committee
Dr Michael Somers BComm, M.Econ.Sc, Ph.D – Deputy Chairman
Appointed: 14/01/2010 as a Nominee of the Minister for Finance under the Government’s National Pensions Reserve Fund Act 2000 (as amended) 14/06/2010 (Deputy Chairman)
Background & Experience: Dr Somers is former Chief Executive Officer of the National Treasury Management Agency. He is Chairman of Goodbody Stockbrokers, a Non-Executive Director of Fexco Holdings Limited, Hewlett-Packard International Bank plc, the Institute of Directors, and President of the Ireland Chapter of the Ireland-US Council. He has previously held the posts of Secretary, National Debt Management, in the Department of Finance, and Secretary, Department of Defence. He is a former Chairman of the Audit Committee of the European Investment Bank and Director of the European Investment Bank and former Member of the EC Monetary Committee.
Dr Somers was Chairman of the group that drafted the National Development Plan 1989-1993 and of the European Community Group that established the European Bank for Reconstruction and Development. He was formerly a member of the Council of the Dublin Chamber of Commerce and a Non-Executive Director of St. Vincent's Healthcare Group Limited and Willis Group Holdings plc.
Committee membership(s): Board Risk Committee, Nomination & Corporate Governance Committee
Catherine Woods BA, Mod (Econ) – Senior Independent Non-Executive Director
Background & Experience: Ms Woods is a Non-Executive Director of AIB Mortgage Bank and EBS d.a.c. She was appointed Senior Independent Non-Executive Director in January 2015. She has been a Director of Beazley Re DAC since July 2015 and became a Director of Beazley plc in January 2016. She is a former Vice President and Head of the JPMorgan European Banks Equity Research Team, where her mandates included the recapitalisation of Lloyds of London and the re-privatisation of Scandinavian banks. Ms Woods is a former Chairman of EBS d.a.c., former director of An Post, a former member of the Electronic Communications Appeals Panel and a former Finance Expert on the adjudication panel established by the Government to oversee the rollout of the National Broadband Scheme.
Committee membership(s): Chairman of the Board Audit Committee, member of the Board Risk Committee & Nomination and Corporate Governance Committee
Simon Ball, B.Sc (Econ), FCA - Non-Executive Director
Background & Experience: Mr Ball has previously held roles as Chairman of Anchura Group Limited and Non-Executive Deputy Chairman and Senior Independent Director of Cable & Wireless Communications plc and has served as Group Finance Director of 3i Group plc and the Robert Fleming Group. He has held a series of senior finance and operational roles at Dresdner Kleinwort Benson and was Director General, Finance, for HMG Department for Constitutional Affairs. He is currently a member of the Board of Commonwealth Games England.
Committee membership(s): Board Risk Committee, Remuneration Committee & Nomination and Corporate Governance Committee
Tom Foley B.Comm, FCA– Non-Executive Director
Background & Experience: Mr Foley is a Non-Executive Director of EBS d.a.c. since November 2012 and AIB Group (UK) p.l.c. since April 2015. He is a Non-Executive Director of Intesa SanPaolo Life d.a.c. Mr Foley is a former Executive Director of KBC Bank Ireland, former CEO of KBC Homeloans and has held a variety of senior management and board positions with KBC in Corporate, Treasury and Personal Banking in Ireland and the UK. He was a member of the Nyberg Commission of Investigation into the Banking Sector during 2010 and 2011 and the Department of Finance Expert Group on Mortgage Arrears and Personal Debt during 2010. Mr Foley is a former Non-Executive Director of BPV Finance (International) plc. He qualified as a Chartered Accountant with PricewaterhouseCoopers (PwC) and is a former senior executive with Ulster Investment Bank.
Committee membership(s): Board Audit Committee & Remuneration Committee
Peter Hagan BSc, Dip BA– Non-Executive Director
Background & Experience: Mr Hagan is former Chairman and CEO of Merrill Lynch’s US commercial banking subsidiaries and was also a director of Merrill Lynch International Bank (London), Merrill Lynch Bank (Swiss), ML Business Financial Services, FDS Inc and The Thomas Edison State College Foundation. Over a period of 35 years he has held senior positions in the international banking industry, including as Vice Chairman and Representative Director of the Aozora Bank (Tokyo). During 2011 and until September 2012, he was a Director of each of the US subsidiaries of IBRC. He is at present a consultant in the fields of financial service litigation and regulatory change.
Committee membership(s): Chairman of the Board Risk Committee & member of the Board Audit Committee
Carolan Lennon, B.Sc, MBA – Non-Executive Director
Background & Experience: Ms Lennon is the Managing Director of Open Eir, Eir's Networks and Wholesale Division. She has held a number of senior roles in Eir, including Acting Managing Director and Consumer and Chief Commercial Officer. Prior to joining Eir, she held a number of senior roles in Vodafone Ireland. Ms. Lennon is a former Non-Executive Director of the DIT Foundation and the Irish Management Institute and currently sits on the Council of Patrons for Special Olympics Ireland.
Committee membership(s): Board Risk Committee & Board Sustainable Business Advisory Committee
Helen Normoyle, BBS – Non-Executive Director
Background & Experience: Ms Normoyle is currently the Chief Marketing Officer of Countrywide, the UK’s largest estate agency group and is moving to take up a new role as Marketing Director Boots UK and Ireland in April 2017. She previously held the role of Chief Marketing Officer at DFS, Britain’s leading upholstered furniture retailer, responsible for all aspects of the company’s marketing communications and PR. Prior to joining DFS, she was Director of Marketing & Audiences at the BBC, responsible for the corporation’s marketing, research, planning and audience services. In 2003, she joined Ofcom, the UK’s telecoms and communications regulator as Director of Market Research where she established and led Ofcom’s market research and intelligence team and, latterly, the Media Literacy team. Before joining Ofcom, she held a range of posts over an eight year period at Motorola, including Director of Marketing and Director of Global Consumer Insights and Product Marketing. She started her career working for one of Europe's leading market research agencies, Infratest+GfK, based in Germany.
Committee membership(s): Chairman of the Board Sustainable Business Advisory Committee
Jim O’Hara – Non-Executive Director
Background & Experience: Mr O'Hara is a former Vice President of Intel Corporation and General Manager of Intel Ireland, where he was responsible for Intel’s technology and manufacturing group in Ireland. He is currently Chairman of a number of indigenous technology start-up companies. He is a past President of the American Chamber of Commerce in Ireland and former board member of Enterprise Ireland and Fyffes plc. Mr O’Hara joined the Board in October 2010 and has been a member of the Audit Committee, Remuneration Committee and Nomination and Corporate Governance Committee since January 2011, and was appointed Chairman of the Remuneration Committee in July 2012. He was appointed Non-Executive Director of EBS d.a.c. in June 2012.
Committee membership(s): Chairman of the Remuneration Committee & member of the Board Audit Committee, Nomination and Corporate Governance Committee & Board Sustainable Business Advisory Committee
Brendan McDonagh, BBS, MA, FCIM – Non-Executive Director
Background and experience: Mr McDonagh is a Non-Executive Director of UK Asset Resolution Limited, where he is the Chairman of the Audit Committee and a Member of the Risk Committee and the Nominations Committee. He currently serves on the advisory board of the business school of Trinity College Dublin. He started his banking career with HSBC in 1979 and worked in Asia, the Middle East, Europe and North America. Mr McDonagh is a former member of the board of Ireland's National Treasury Management Agency and other previous roles include Executive Chairman of the Bank of N.T. Butterfield & Son Limited, Hamilton, Bermuda, and a former CEO of HSBC North America Holdings Inc with responsibility for the Group’s banking and consumer finance operations in the US and Canada. He was also Group Managing Director for HSBC Holdings Inc and a member of the HSBC Group Management Board.
Committee membership(s): Board Risk Committee
Bernard Byrne, FCA – Chief Executive Officer
Background & Experience: Mr Byrne was appointed Chief Executive Officer in May 2015. He joined AIB in May 2010 as Group Chief Financial Officer and member of the Leadership Team and was co-opted to the Board on 24 June 2011. Since then he has held a number of leading director roles including Director of Personal, Business & Corporate Banking. In January 2015 he was appointed President of Banking & Payments Federation Ireland (BPFI) and remained in this position until December 2016. Mr Byrne is the Deputy President of the Institute of Banking. A Chartered Accountant by profession, Mr Byrne joined PricewaterhouseCoopers (PwC) in 1988 and moved to ESB International, a leading international energy engineering and investment firm, in 1994, where he worked as Commercial Director for International Investments. In 1998, he became the Finance Director and later Deputy CEO of IWP International plc. In 2003, he joined ESB, an electricity utility, as Group Finance Director (and later Commercial Director), until he left to join AIB.
Committee membership(s): None
Mark Bourke, B.E., ACA, AITI - Chief Financial Officer
Background & Experience: Mr Bourke joined AIB in April 2014 as Chief Financial Officer and member of the Leadership Team and was co-opted to the Board on 29 May 2014. He joined AIB from IFG Group plc where he held a number of senior roles, including Group Chief Executive Officer, Deputy Chief Executive Officer and Finance Director. Mr Bourke began his career at PricewaterhouseCoopers (PwC) in 1989 and is a former partner in international tax services with PwC US in California. He is a member of Chartered Accountants Ireland and the Irish Taxation Institute.
Committee membership(s): None
Executive Leadership Team
Bernard Byrne, FCA – Chief Executive Officer
Background and experience: Mr Byrne was appointed Chief Executive Officer in May 2015. He joined AIB in May 2010 as Group Chief Financial Officer and member of the Leadership Team and was co-opted to the Board on 24 June 2011. Since then he has held a number of leading director roles including Director of Personal, Business & Corporate Banking. In January 2015 he was appointed President of Banking & Payments Federation Ireland (BPFI) and remained in this position until December 2016. Mr Byrne is the Deputy President of the Institute of Banking. A Chartered Accountant by profession, Mr Byrne joined PricewaterhouseCoopers (PwC) in 1988 and moved to ESB International, a leading international energy engineering and investment firm, in 1994, where he worked as Commercial Director for International Investments. In 1998, he became the Finance Director and later Deputy CEO of IWP International plc. In 2003, he joined ESB, an electricity utility, as Group Finance Director (and later Commercial Director), until he left to join AIB.
Committee membership(s): None
Helen Dooley, LLB – Group General Counsel
Background & Experience: Ms Dooley was appointed to her current role as Group General Counsel and a member of the Bank’s Executive Leadership Team in October 2012. In June 2014 she also assumed responsibility for the Compliance function. Ms Dooley previously held the role of Head of Legal in EBS d.a.c. (formerly known as EBS Building Society). Prior to this, she held a number of other senior roles in EBS d.a.c. including Head of Regulatory Compliance and Company Secretary. Ms Dooley began her career in 1992 working principally as a banking and restructuring lawyer with Wilde Sapte solicitors in London, moving to Hong Kong in 1998 to work for Johnson Stokes & Master solicitors and returning to Ireland in 2001 to work for A&L Goodbody solicitors.
Mark Bourke, B.E., ACA, AITI - Chief Financial Officer
Background and experience: Mr Bourke joined AIB in April 2014 as Chief Financial Officer and member of the Leadership Team and was co-opted to the Board on 29 May 2014. He joined AIB from IFG Group plc where he held a number of senior roles, including Group Chief Executive Officer, Deputy Chief Executive Officer and Finance Director. Mr Bourke began his career at PricewaterhouseCoopers (PwC) in 1989 and is a former partner in international tax services with PwC US in California. He is a member of Chartered Accountants Ireland and the Irish Taxation Institute.
Committee membership(s): None
Triona Ferriter – Chief People Officer
Background & Experience: Ms Ferriter joined AIB in January 2017 as Chief People Officer, and a member of the Bank’s Executive Leadership Team. She has years experience in Human Resources operating at a Senior Management level within both US multinational and indigenous Irish companies, working across diverse business functions, including sales and marketing, manufacturing, shared services and retail, mainly in the Pharmaceutical sector. With experience in companies such as Schering-Plough/MSD, Dunnes Stores and Procter & Gamble, her responsibilities have included the full range of Human Resources functions both at a local organisation and pan European level, and key areas of expertise include effective change management through organisation restructuring and development, strategic business partnering and planning, and management of industrial and employee relations in both unionised and non-unionised environments.
Donal Galvin - Group Treasurer
Background & Experience: Mr Galvin joined AIB in 2013 as Head of Treasury and was appointed to the Bank’s Executive Leadership Team as Group Treasurer in 2016. He has worked in domestic and international financial markets for the past 20 years. Prior to joining AIB, he was Managing Director in Mizuho Securities Asia, the investment banking arm of Japanese bank Mizuho, where he was responsible for Asian Global Markets. Before that, he was Managing Director in Dutch Rabobank where his responsibilities included managing all European & Asian Global Financial Markets business, as well as leading Rabobank’s Global Client Structured Products division.
Colin Hunt Ph. D – Managing Director, Wholesale Institutional & Corporate Banking
Background & Experience: Dr Hunt joined AIB as Managing Director, Wholesale & Corporate Institutional Banking Division and a member of the Bank’s Executive Leadership Team in August 2016. Prior to joining AIB, he was Managing Director at Macquarie Capital where he led the development of its business in Ireland. Previously, Dr Hunt was a Special Policy Adviser at the Departments of Transport and Finance, Research Director and Chief Economist at Goodbody Stockbrokers, Head of Trading Research and Senior Economist at Bank of Ireland Group Treasury and a country risk analyst at NatWest.
Jim O’Keeffe, BA, HDip – Head of Financial Solutions Group
Background and experience: Mr O’Keeffe is a graduate of University College Cork and has over twenty-seven years banking experience with AIB. During his career, he has worked across many aspects of banking from IT to the retail business. From 2004 to 2008, he relocated to AIB’s then subsidiary BZWBK in Poland as Head of Personal & SME Business Development. Following his return to Ireland, from 2009 to 2011 he was Head of AIB’s Direct Channels before taking up his previous role as Head of AIB’s Mortgage Business in June 2011. He was appointed as Head of Financial Solutions Group and a member of the bank’s Executive Leadership Team in November 2015.
Robert Mulhall B.Sc, MA, QFA, CFA – Managing Director, Retail & Commercial Banking Ireland
Background & Experience: Mr Mulhall was appointed Managing Director of AIB’s Retail & Commercial Banking Ireland (formerly known as Retail, Corporate and Business Banking) in October 2015. His career in AIB has spanned almost 20 years and covered a variety of roles up to senior executive management level in areas including Digital Channels Innovation, Retail Banking Distribution, Customer Relationship Management, Business Intelligence, Strategic Marketing, Strategy Development, Operations and Sales Management. Coupled with his AIB career, he also held the position of Managing Director, Distribution & Marketing Consulting, and Financial Services with Accenture in North America from 2013 to 2015. In this capacity he brought his industry experience to build a rapidly growing consulting practice in the fast moving and innovative areas of Financial Services in North America.
Tom Kinsella, B.Comm, FMII, CBD – Chief Marketing Officer
Background & Experience: Mr Kinsella joined AIB in November 2012 as Group Marketing Director and was appointed to his current role as Chief Marketing Officer and a member of the bank’s Executive Leadership Team in November 2015. In his role he is responsible for ensuring all parts of the organisation are mobilised around providing a great customer experience, in order to realise AIB’s objective of becoming a truly customer focused bank. Prior to AIB he worked in a variety of senior marketing roles in Diageo, working across a wide variety of brands globally and domestically.
Brendan O’Connor, BA, MBA – Managing Director, AIB Group (UK) p.l.c.
Background & Experience: Mr O’Connor joined AIB in 1984 and has held a number of senior roles throughout the organisation both in New York and Dublin including Head of AIB Global Treasury Services, Head of Corporate Banking International and Head of AIB Business Banking. Mr O’Connor joined the Bank’s Executive Leadership Team in February 2013 as Head of Financial Solutions Group. He was appointed to his current role of Managing Director, AIB Group (UK) p.l.c. in October 2015.
Tomás O’Midheach, BComm, MBS, FCCA – Chief Operating Officer
Background & Experience: Mr O’Midheach was appointed to the role of Chief Operating Officer in February 2016. He has over 22 years’ experience in the financial services industry. His banking experience has spanned many diverse areas of banking including Finance, Data, Customer Analytics, Direct Channels and Digital. Mr O’Midheach spent 11 years with Citibank in the UK, Spain & Dublin where he held several senior positions in Finance. He joined AIB in June 2006 to head up a finance operating model transformation and has since held a number of senior executive positions including Head of Direct Channels & Analytics and Chief Digital Officer.
The Chairman sets the agenda for each Board meeting. The Directors are provided with relevant papers in advance of the meetings to enable them to consider the agenda items, and are encouraged to participate fully in the Board’s deliberations. The Board held 14 scheduled meetings and 2 additional out-of-course meetings during 2016. Attendance at Board meetings and meetings of Committees of the Board is reported on below. During 2016, the Non-Executive Directors met on occasion in the absence of the Executive Directors, in accordance with good governance standards. A number of Non-Executive Directors of Allied Irish Banks, p.l.c. are also Non-Executive Directors of the Company’s major regulated subsidiary companies, namely AIB Group (UK) p.l.c., AIB Mortgage Bank and EBS d.a.c.
It is the policy of the Board that a majority of the Directors should be Non-Executive. At 31 December 2016, there were 10 Non-Executive Directors and 2 Executive Directors. The Board deems the appropriate number of Directors to meet the requirements of the business to be between 10 and 14. There is a procedure in place to enable the Directors to take independent professional advice, at the Group’s expense. The Group holds insurance cover to protect Directors and Officers against liability arising from legal actions brought against them in the course of their duties.
Balance and Independence
Responsibility has been delegated by the Board to the Nomination and Corporate Governance Committee for ensuring an appropriate balance of experience, skills and independence on the Board. Non-Executive Directors are appointed so as to provide strong and effective leadership and appropriate challenge to executive management. The independence of each Director is considered by the Nomination and Corporate Governance Committee prior to appointment and reviewed annually thereafter. In reviewing the independence of Directors, the Committee considers the independence criteria contained in the 2015 Requirements and the 2014 UK Code. The Board has determined that all Non-Executive Directors in office at 31 December 2016, namely Mr Simon Ball, Mr Tom Foley, Mr Peter Hagan, Ms Carolan Lennon, Mr Brendan McDonagh, Ms Helen Normoyle, Mr Jim O’Hara, Mr Richard Pym, Dr Michael Somers and Ms Catherine Woods are independent in character and judgement and free from any business or other relationship with the Company or the Group that could affect their judgement. In 2011, the Central Bank of Ireland confirmed that Dr Somers should be considered independent for the purposes of the 2015 Requirements. Notwithstanding Dr Somers’ designation as non-independent under the 2014 UK Code arising from his appointment by the Irish State as shareholder, the Board is satisfied that Dr Somers exercises independence of thought and action in fulfilling his duties as a Non-Executive Director.
There is a formal process in place for the annual evaluation of the Board’s own performance and that of its principal Committees and individual Directors. In accordance with the 2015 Requirements and the 2014 UK Code, an external evaluation is conducted at least every three years, with internal evaluations in the intervening years. The objective of these evaluations is to review past performance with the aim of identifying any opportunities for improvement, determining whether the Board and its Committees are as a whole effective in discharging their responsibilities and, in the case of individual Directors, to determine whether each Director continues to contribute effectively and to demonstrate commitment to the role.
An external independent evaluation was conducted by Boardroom Review Limited during 2014, with internal evaluations undertaken during 2015 and 2016. The self-evaluation process, led by the Chairman and supported by the Company Secretary, included the completion of questionnaires including written evaluations by each Director (covering areas such as Board composition, Board meetings and the effectiveness thereof, information quality and flows, and Board priorities), one to one discussions between the Chairman and each Director, and Board discussion of the outcome of the evaluation process and agreed actions. On reviewing the outcome of the 2016 internal evaluation process, the Board concluded that each individual Director continued to make a valuable contribution to the deliberations of the Board and demonstrated continuing commitment to the role, and that the recommendations identified during the previous evaluation processes had been adequately addressed.
The Board agreed on its priority areas of focus for the year ahead, which included development of people, talent and culture, the appropriateness of the current Board skillset and experience, including in the context of succession planning, and initiatives for (a) continuing to improve the quality of information provided to the Board, (b) a more forward looking approach in the development of the Group’s strategy, and (c) enhancing the professional development and training provided to Directors. In addition, during the evaluation, the Directors noted the continued application of the Government remuneration restrictions and the risk to the Group of management attrition. An external Board evaluation will be conducted during 2017.
Attendance at Board and Committee meetings is one of a number of important factors considered in evaluating Directors’ performance, and a table showing each Board Member’s attendance at such meetings is shown below and separately within the commentary on each of the Board Committees on subsequent pages. As part of the process, the Chairman meets annually with each Director to review their performance.
These reviews include discussion of, inter alia, the Director’s individual contributions and performance at the Board and relevant Board Committees, the conduct of Board meetings, the performance of the Board as a whole and its committees, compliance with Director-specific provisions of the relevant Central Bank Code, the requirements of the Central Bank’s Fitness and Probity Regulations, and other specific matters which the Chairman and/or Directors may wish to raise. Separately, during 2016, the Senior Independent Non-Executive Director led an evaluation of the Chairman’s performance with the other Directors for consideration by the Board and the Chairman.
Attendance at scheduled Board and Board Committee Meetings
Name Board Scheduled Board
(out of course)
Board Risk Comm Remuneration Committee Nomination & Corporate Governance Committee Directors A B A B A B A B A B A B
Dr. Michael Somers
Column A indicates the number of scheduled meetings held during 2016 which the Director was eligible to attend; Column B indicates the number of meetings attended by each Director during 2016.
Conflicts of Interest
The Board approved Code of Conduct and Conflicts of Interest Policy sets out how actual, potential or perceived conflicts of interest are to be evaluated, reported and managed to ensure that Directors act at all times in the best interests of the Company and its stakeholders. Executive Directors, as employees of AIB, are also subject to the organisation’s Code of Conduct and Conflicts of Interests Policy for employees.
Terms of Appointment
Non-Executive Directors are generally appointed for a three year term, with the possibility of renewal for a further three years on the recommendation of the Nomination and Corporate Governance Committee. Any additional term beyond six years will be subject to annual review and approval by the Board.
Dr Michael Somers was appointed Non-Executive Director in 2010 as a nominee of the Minister for Finance under the Irish Government’s National Pensions Reserve Fund Act 2000 (as amended) for a three year term to 31 December 2012. Dr Somers was reappointed a Non-Executive Director, under the same regime, for a further period of one year with effect from 1 January 2013, and for a further two years with effect from 1 January 2014. He was subsequently reappointed a Non-Executive Director for a further two year period from December 2015, on foot of a direction to the National Treasury Management Agency by the Minister for Finance pursuant to section 43(1) of the National Treasury Management (Amendment) Act 2014.
Following appointment, in accordance with the requirements of the Company’s Constitution, Directors are required to retire at the next Annual General Meeting (‘AGM’), and may go forward for reappointment, and are subsequently required to make themselves available for reappointment at intervals of not more than three years. Since 2005, all Directors have retired from office at each AGM and have offered themselves for reappointment with the exception of Directors appointed by the Government. Under the terms of the Government’s capital agreements, Government appointed Directors are not, and have not been, required to stand for election or regular re-election by shareholders.
Letters of appointment, as well as dealing with terms of appointment and appointees’ responsibilities, stipulate that a specific time commitment is required from Directors. A copy of the Directors’ letters of appointment are available to members of the Company for inspection during business hours on request from the Group Company Secretaries.
Directors disclose details of their other significant commitments along with a broad indication of the time absorbed by such commitments before appointment. Before accepting any additional external commitments, including other directorships that might impact on the time available to devote to their role, the agreement of the Chairman and the Group Company Secretaries, and, in certain cases, the Central Bank, must be sought.
Induction and Professional Development
There is an induction process in place for new Directors, the contents of which varies for Executive and Non-Executive Directors. In respect of the latter, the induction is designed to provide familiarity with the Group and its operations, and comprises the provision of relevant briefing material, including details of the Group’s strategic, business and financial plans, and a programme of meetings with the Chief Executive Officer and the Senior Management of businesses and support and control functions. A programme of targeted and continuous professional development is in place for Non-Executive Directors.
The Board is assisted in the discharge of its duties by a number of Board Committees, whose purpose it is to consider, in greater depth than would be practicable at Board meetings, matters for which the Board retains responsibility. The composition of such Committees is reviewed annually. Each Committee operates under terms of reference approved by the Board. The minutes of all meetings of Board Committees are circulated to all Directors, for information and are formally noted by the Board. Papers for all Board Committee meetings are also made available to all Directors, irrespective of membership. This provides an opportunity for Directors who are not members of those Committees to seek additional information or to comment on issues being addressed at Committee level. The terms of reference of the Board Audit Committee, the Board Risk Committee, the Nomination and Corporate Governance Committee and the Remuneration Committee are available below at Board Committees.
During 2016, the Board established a Sustainable Business Advisory Committee, comprising of Non-Executive Directors and senior executive management members, to support the execution of the Group’s sustainable business strategy, which includes the development and safeguarding of the Group’s ‘social license to operate’, such that AIB plays its part in helping its customers prosper as an integral component of the Group’s business and operations. Further details in relation to related activities are available on pages 16 to 22 of the Annual Financial Report.
In carrying out their duties, Board Committees are entitled to take independent professional advice, at the Group’s expense, where deemed necessary or desirable by the Committee Members.
Board Audit Committee
Members: Ms Catherine Woods (Chairman), Mr Tom Foley, Mr Peter Hagan, Mr Jim O’Hara
The Committee is appointed by the Board to assist the Board in fulfilling its oversight responsibilities in relation to:
the quality and integrity of the Group’s accounting policies, financial and narrative reports, and disclosure practices;
the effectiveness of the Group’s internal control, risk management, and accounting and financial reporting systems;
the adequacy of arrangements by which staff may, in confidence, raise concerns about possibly improprieties in matters of financial reporting or other matters;
the independence and performance of the Internal and External Auditors.
The Committee’s Terms of Reference are available here.
The Board Audit Committee Report on the Committee’s activities relating to the financial year ended 31 December 2016, including a letter from the Committee Chairman, can be found on pages 190 to 193 in the Annual Financial Report.
Board Risk Committee
Members: Mr Peter Hagan, Chairman, Mr Simon Ball, Mr Brendan McDonagh, Dr Michael Somers, Ms Catherine Woods.
While the Committee has a wide range of responsibilities, its primary roles and responsibilities are:
providing oversight and advice to the Board in relation to current and potential future risks facing the Group and risk strategy in that regard, including the Group’s risk appetite and tolerance;
ensuring the effectiveness of the Group’s risk management infrastructure; – compliance with relevant laws, regulation obligations and relevant codes of conduct;
monitoring and reviewing the Group’s risk profile, risk trends, risk concentrations and risk policies;
considering and acting upon the implications of reviews of risk management undertaken by Group Internal Audit and/or external third parties.
The Committee’s Terms of Reference are available here.
The Board Risk Committee Report on the Committee’s activities relating to the financial year ended 31 December 2016, including a letter from the Committee Chairman, can be found on pages 194 to 197 in the Annual Financial Report.
Nomination and Corporate Governance Committee
Members: Mr Richard Pym (Chairman), Mr Simon Ball, Mr Jim O’Hara, Dr Michael Somers, Ms Catherine Woods.
The Nomination and Corporate Governance Committee has oversight responsibility for:
reviewing the size, structure and composition of the Board, including its numerical strength, the ratio of executive to Non-Executive Directors, the balance of skills, knowledge and experience of individual Members of the Board and of the Board collectively, and the diversity and service profiles of the Directors, and making recommendations to the Board with regard to any changes considered appropriate;
identifying persons who, having regard to the criteria laid down by the Board, appear suitable for appointment to the Board, evaluating the suitability of such persons and making recommendations to the Board;
reviewing the size, structure, composition, diversity and skills of the Board Committees and subsidiary company Boards and the independence of Non-Executive Directors;
reviewing Board and Senior Executive succession planning;
reviewing and assessing the adequacy of the Company's corporate governance policies and practices.
The Committee’s Terms of Reference are available here.
The Nomination & Corporate Governance Committee Report on the Committee’s activities relating to the financial year ended 31 December 2016, including a letter from the Committee Chairman, can be found on pages 198-200 in Annual Financial Report.
Members: Mr Jim O’Hara (Chairman), Mr Simon Ball, Mr Tom Foley, Mr Richard Pym.
The Remuneration Committee has responsibility for:
recommending Group remuneration policies and practices to the Board;
the remuneration of the Chairman of the Board (which matter is considered in his absence); – determining the remuneration of the Chief Executive Officer, other Executive Directors, and the other members of the Leadership Team, under advice to the Board;
reviewing the remuneration components of Identified Staff, who are individuals classified by AIB as ‘material risk takers’ in accordance with the Remuneration Guidelines of the European Banking Authority (“EBA”);
performance-related and share-based incentive schemes, when appropriate.
The Committee's Terms of Reference are available here.
The Remuneration Committee Report on the Committee’s activities relating to the financial year ended 31 December 2016, including a letter from the Committee Chairman, can be found on pages 201-202 in the Annual Financial Report.
External Auditor Independence
A policy on fees paid to the Auditor (“the Policy”) is in place outlining the circumstances in which the Statutory Auditor (“the Auditor”) is permitted to provide non-audit services to AIB. This Policy is reviewed and approved by the Board Audit Committee (“BAC”).
AIB Group will not engage the Auditor to provide permitted non-audit services without the prior approval of the BAC. The BAC may pre-approve, at the beginning of each year, permitted services subject to an individual contract limit. Contracts of greater value will require individual approval. Where pre-approval has not been granted, permission to engage the Auditor will be granted on a case-by-case basis either at scheduled BAC meetings or, alternatively, if approval needs to be granted outside of the scheduled meetings, the BAC Chair and one other Committee member may grant such permission which will be reported to the BAC at the next scheduled meeting. Where it is feasible, non-audit related services contracts will be put out to tender among suitably qualified firms.
The utilisation of pre-approved limits is a matter for the Finance function. As an additional governance control, all requests to engage the Auditor in non-audit service are required to be submitted in writing to the Finance Function.
In considering the proposed retention of the Auditor for non-audit services, the BAC reviews and monitors the independence and objectivity of the Auditor, taking into consideration relevant legislation, ethical guidance and the level of non-audit services relative to audit services.
Pre-approved services are divided into the following four categories.
1. Audit Services, which includes the annual audit services engagement terms, and any changes in terms, conditions and fees which result from changes in audit scope or the structure of the AIB Group, and other matters including:
audits under generally accepted auditing standards;
quarterly reviews under the statement of Auditing Standards No.100 ‘Interim Financial Information’
2. Audit Related Services, including assurance and associated services that are reasonably related to the performance of the audit or review of the Group’s Financial Statements;
3. Tax Services, including certain tax compliance, expatriate tax, and tax consultation services, can be provided by the Auditor provided that they have no direct or material effect, separately or in aggregate on the financial statements, that the estimation of the effect on the audited financial statements is comprehensively documented and explained in the additional report to the BAC and the principles of independence laid down in Directive 2006/43/EC are complied with;
4. Other Consultancy Services, including certification of capital or revenue grants, due diligence assistance and providing services and/recommendations in new accountancy provisions or standards.
No authority within AIB can grant approval to engage the Auditor to provide certain prohibited services. Prohibited services are outlined in the Policy and include:
Certain Tax Services, relating to the preparation of tax forms, payroll tax, custom duties, identification of public subsidies, tax incentives, support regarding tax inspections unless required by law, calculation of direct, indirect and deferred tax and the provision of tax advice;
Services that involve any part in the management or decision-making of AIB;
Bookkeeping or any services relating to the preparation of accounting records or the financial statements;
Design or implementation of internal controls or risk management procedures relating to the preparation and/or control of financial information or designing and implementing financial information systems; Valuation Services;
Certain Legal Services;
Services related to the Group’s internal audit function;
Services linked to financing, capital structure and allocation or investment strategy;
Promoting, dealing or underwriting shares in AIB;
Certain Humans Resources Services.
A new EU regulatory framework on statutory audit entered into force in May 2014 through (1) a revised Directive 2014/56/EU, which includes measures to strengthen the independence of statutory auditors, make the audit report more informative, and strengthen audit supervision throughout the EU, and (2) a new Regulation 537/2014, which introduces stricter requirements on the statutory audits of public-interest entities, such as listed companies, credit institutions, and insurance undertakings. Member States had 2 years to implement the revised Directive, with the Regulation becoming directly applicable to Member States on 17 June 2016.
The Policy will be updated once national transposition has completed to reflect all additional relevant matters arising therefrom.
Risk Oversight and Accountability
The financial statements for the financial year ended 31 December 2016 have been prepared on a going concern basis as the Directors are satisfied, having considered the principal risks and uncertainties impacting the Group, that it has the ability to continue in business for the period of assessment. The period of assessment used by the Directors is twelve months from the date of approval of these annual financial statements.
In making their assessment, the Directors have considered a wide range of information relating to present and future conditions. These have included financial plans covering the period 2017 to 2019 approved by the Board in December 2016, liquidity and funding forecasts, and capital resources projections, all of which have been prepared under base and stress scenarios. In formulating these plans, the current Irish economic environment and forecasts for growth and employment were considered as well as the stabilisation of property prices. The Directors have also considered the outlook for the eurozone and UK economies, and the factors and uncertainties impacting their performance including the possible fallout from Brexit.
In addition, the Directors have considered the principal risks and uncertainties which could materially affect the Group’s future business performance and profitability and which are outlined on pages 50 to 58 in the ‘Risk management’ section of the Annual Financial Report. The Directors believe that the capital resources are sufficient to ensure that the Group is adequately capitalised both in a base and stress scenario. The Group’s regulatory capital resources are detailed on pages 43 to 48 Annual Financial Report. The Group funding and liquidity profile is outlined on pages 146 to 158 Annual Financial Report. In relation to funding and liquidity, the Directors are satisfied, based on AIB’s position in the market place that in all reasonable circumstances required liquidity and funding would be available to the Group during the period of assessment. Accordingly, the Directors believe that it is appropriate to prepare the financial statements on a going concern basis having concluded that there are no material uncertainties related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern over the period of assessment. The Annual Financial Report is available here.
Directors' Statement on Risk Management and Internal Controls
The Board of Directors is responsible for the effective management of risks and opportunities and for the system of internal controls in the Group. The Group operates a continuous risk management process which identifies and evaluates the key risks facing the Group and its subsidiaries. The system of internal controls is designed to ensure that there is thorough and regular evaluation of the nature and extent of risks and the ability of the Group to react accordingly, rather than to eliminate risk. This is done through a process of identification, measurement, monitoring and reporting, which provides reasonable, but not absolute, assurance against material misstatement, error, loss or fraud. This process includes an assessment of the effectiveness of internal controls, which was in place for the full year under review up to the date of approval of the accounts, and which accords with the Central Bank of Ireland’s 2015 Corporate Governance requirements for Credit Institutions and the UK Corporate Governance Code. Further information can be found on page 208 of the Annual Financial Report.
Relations with Shareholders
The Group has a number of procedures in place to allow its shareholders and other stakeholders to stay informed about matters affecting their interests. In addition to the Annual Financial Report, which is only sent to those shareholders who request it, the following communication tools are used by the Group:
The Shareholders’ Report (‘the Report’) is a summary version of AIB’s Annual Financial Report. This Report, which covers AIB’s performance in the previous year, is sent to shareholders who have opted to receive it instead of the full Annual Financial Report. This summary report does not form part of the Annual Financial Report and is referred to for reference purposes only.
This website www.group.aib.ie contains the yearly Annual Financial Reports, the Interim Report/Half-yearly Financial Report, and the Annual Report on Form 20-F. In accordance with the Transparency (Directive 2004/109/EC)(Amendment)(No.2) Regulations 2015, all Annual Financial Reports and Half-Yearly Financial Reports will remain available to the public for at least ten years. The Group’s presentation to fund managers and analysts of annual and interim financial results are also available on this website.
Annual General Meeting (“AGM”)
All shareholders are invited to attend the AGM and to participate in the proceedings. At the AGM, it is practice to give a brief update on the Group’s performance and developments of interest for the year to date. Separate resolutions are proposed on each separate issue and voting is conducted by way of poll. The votes for, against, and withheld, on each resolution, including proxies lodged, are subsequently published on AIB’s website. Proxy forms provide the option for shareholders to direct their proxies to withhold their vote. It is usual for all Directors to attend the AGM and to be available to meet shareholders before and after the meeting. The Chairmen of the Board Committees are available to answer questions about the Committees’ activities. A help desk facility is available to shareholders attending. The next AGM is scheduled to be held on 27 April 2017, at the RDS Concert Hall, Merrion Road, Ballsbridge, Dublin 4 and it is intended that the Notice of the Meeting will be posted to shareholders at least 20 working days before the meeting, in accordance with UK Code requirements.