UK Bank Boards Analysis, July 2020 Welcome to the tenth, bi-annual Ridgeway Partners UK Bank Boards Analysis, as of July 2020. We list all non executive and executive board members, including their board roles, business backgrounds, nationality, gender and tenure. We have also included selected analytics on the 346 directors across the 34 banks. We have divided the sector into the following groups: Table 1a Largest UK Bank/Mutual Boards Table 1b Ring-Fenced and Non-Ring-Fenced UK Bank Boards Table 2 Mid-sized Listed UK Bank Boards Table 3 Subsidiary/Private Equity/Hedge Fund backed UK Bank Boards Table 4 Larger UK Building Societies and Leading Irish Bank Boards Table 5 ‘Neobank’/Fintech UK Bank Boards Given the unique COVID-19 context, we have added some commentary on impacts on the boardroom and potential future implications. BOSTON • GLASGOW • LONDON • NEW YORK UK Bank Boardswww.ridgewaypartners.com Analysis July 2020 | 1 HEADLINES OVER THE LAST SIX MONTHS • Despite the ongoing challenges of COVID and broader political and economic uncertainty, board succession and recruitment has con- tinued across financial services and banking, although with something of a hiatus in April. Some companies have put appointments on hold, although most have continued and new projects continue to start. Please see Page 10 for more detailed reflections on COVID impacts in the boardroom. • There has been movement across the boards over the last six months, but rather less than usual, with in fact more departures than new ap- pointments. During this challenging period, many boards have been taking stock and reviewing their strategic, and hence talent requirements. In terms of hiring trends, and similar to the last financial crisis, there has been evidence of clients leaning towards appointing pluralists who have more time than serving executives, and who also bring years of relevant committee chair experience, restructuring track record and closer sector relevance. There is a risk this may be at the expense of other key areas such as diversity and innovation. • Candidates and clients are more conscious than ever about their time commitments and overboarding, and are being selective about the roles they pursue. Recruitment processes have, in several cases, sped up due to the relative ease of arranging interviews for clients and candidates based at home. Overall, boards and candidates have been willing to make appointments and accept offers without face to face meetings. • The Governance Code relating to chairs rotating off after nine years continues to lead to changes. We do expect that during this COVID phase some boards will choose to extend certain chair and non executive tenures for stability. • Boards continue to address diversity proactively in its widest sense. There continues to be strong demand for greater female representation in the boardroom, although there has been more progress here. The Parker Report and recent social events have highlighted more than ever the lack of Black, Asian and Minority Ethnicity representation across UK banking, and this is becoming a greater focus for hiring. • Boards are increasingly focused on broader diversity including “diversity of thought and business background”, including sector, business context and geography. It also includes experience of technology and innovation, a customer/conduct focus and accessing a more relevant, “millennial” perspective. Boards are interested in appointing current executives as NEDs, although time commitment remains the constraint here, particularly for committee chairs. • Addressing climate change and sustainability has risen significantly up the agenda, with recent events highlighting the significance of ESG themes in banking. Many believe that the “G”, Governance, is quite well advanced and can provide the framework for more action on the “E”, Environmental, and the “S”, Social, aspects with a particular emphasis on overall business sustainability in future. Several of the larger banks now have a dedicated “Responsible Banking”/ESG sub committee on the main board as highlighted on Table 1a. This is also addressed in some cases via dedicated Customer and Conduct sub committees. Most businesses across the market still manage these themes at the board level without dedicated sub committees. • Boards have now, in several cases, appointed Designated NEDs with responsibility for employee relations and representation. We are aware of nine banks that have a dedicated board member with this responsibility. • Several of the largest banks have established a Technology/Resilience sub committee although many others choose to manage this as part of the overall board and risk committee agenda. Recent developments around COVID are encouraging boards to assess whether they have enough skills regarding business transformation, restructuring and rapid digital and operational change. The shift from digital and innovation expertise, towards technology resilience, cyber and change is now broadening to include themes of restructuring and flexible working transformation. Board members are now all engaged with changing customer demands, cloud and agile operations, fintech/digital competition and partner- ships, new ways of remote working, and innovative payments. Company highlights CHAIRS • New chair appointments have been announced at Virgin Money UK PLC (David Bennett), Lloyds Banking Group PLC (Robin Budenberg), Metro Bank PLC (Robert Sharpe) and Tesco Bank (Sir John Kingman). NON EXECUTIVE DIRECTORS • During the first half of 2020, there have been new NED appointments made at HSBC Holdings PLC, Lloyds Banking Group PLC, Standard Char- tered PLC, Metro Bank PLC, Paragon Banking Group PLC, Aldermore Bank PLC, Bank of Ireland UK PLC, and TSB Banking Group PLC. There are a number of other appointments pending regulatory approval. EXECUTIVE DIRECTORS • There have been new chief executive officerappointments at HSBC Holdings PLC, HSBC Bank PLC, Coventry Building Society, Close Brothers PLC, AIB (UK) PLC and Monzo Bank Ltd. Other significant executive director appointments include Tony Prestedge as Deputy Chief Executive Officer at Santander UK PLC. Notable appointments across the sector include Paul Marriott-Clarke as Head of Customer at Barclays Bank UK PLC and David Lindberg as Chief Executive Officer, Retail and Jennifer Tippin as Chief Transformation Officer at Royal Bank of Scotland Group PLC. Chief Executive succession is underway at Lloyds Banking Group • There have been new chief financial officer appointments at NatWest Markets PLC and Leeds Building Society. Rachel Lawrence will become Chief Financial Officer at Secure Trust Bank PLC in September 2020. There are chief financial officer search processes underway at Virgin Money UK PLC, AIB Group UK PLC, Starling Bank Ltd, and Revolut Ltd. OTHER BANK, FINTECH AND CHALLENGER HIGHLIGHTS • In terms of other growing UK bank businesses, Richard Pym has become Chair at Castle Trust Bank and Hampden & Co PLC have appointed Simon Miller as their new Chair. In the Fintech market, Tide is seeking a new Chair. 2 | BOSTON • GLASGOW • LONDON • NEW YORK UK Bank Boards Analysis July 2020 These tables summarise the composition of UK Bank Boards. The analysis is based on 346 directors of 34 banks, as of July 2020.* *The Ring-Fenced and Non-Ring-Fenced bank board members on Table 1b are not included in the analytics due to the overlap of board members with the group boards. 6 40 5 35 30 4 25 3 20 2 15 Number of banks 10 1 5 0 of female directors Percentage 0 6 7 8 9 10 11 12 13 14 CEO CFO EXEC CHAIR NED Number of directors Role BOARD SIZE GENDER – BY ROLE • The average board size is 10.2 directors, ranging from 6 for Tandem and • In total, 40% of all bank NEDs are female compared to 38.7% of all FTSE Zopa to 14 for Lloyds and Santander. 350 NEDs. • 15% of the bank EDs are female (12% of CEOs, 19% of CFOs and 13% of other EDs). This compares to 11.8% of all FTSE 350 EDs (as of July 2020). 12 % 100 10 80 8 60 6 40 4 20 Number of banks 0 2 0 Risk - Male SID - Male 0 1 2 3 4 5 Chair - Male Audit - Male SID - Female Chair - Female Audit - Female Risk - Female Number of female directors Remuneration - Male GENDER – DIRECTORS Remuneration - Female • 31.5% of all board directors are female. This is slightly below the GENDER – COMMITTEE CHAIRS Hampton-Alexander target of 33% representation set for the end of 2020, • The role with the highest proportion of females is Remuneration Chair (58%) and compares to 30.9% for the FTSE 350 as a whole (as of July 2020). followed by SIDs (29%). This compares to 24% chairs of audit, 15% chairs of risk and 9% of chairs. • To reach the target of 33% would require a net increase of just five female directors (taking the total to 114). 6 British Irish 5 American 4 Spanish 3 South African 2 New Zealander Number of Chairs French 1 Chinese 0 TOP 8 NATIONALITIES 1 2 3 4 5 6 7 8 9 • 70% of directors are British and 30% other nationalities. 8% are American Total years on board (28), 17% other European nationalities (the top nationalities being Irish 39, CHAIR TENURE Spanish 11 and French 3), 5% other nationalities (the top other nationalities • The typical (mean) year of appointment was 2016. The typical (median) chair being South African 4, Chinese 3 and New Zealander 3). has been on the board for 5 years. This includes time they were a NED or Chair Elect. BOSTON • GLASGOW • LONDON • NEW YORK UK Bank Boards Analysis July 2020 | 3 Table Largest UK Bank/Mutual Boards Analysis as of July 2020 Key: NAME Year of joining board Nationality