Corporate Governance

The Board is currently made up of 7 Non-Executive Directors (the majority of which are independent) and 3 Executive Directors.  One of the Non-Executive Directors is a shareholders’ nominee who sits on the parent board, and acts as a liaison point between the two boards.  Non-Executive Directors are appointed so that there is a wide mix of backgrounds, experience and expertise.  This ensures a strong and effective leadership which can independently and effectively monitor and challenge the executive management and their decision making.

AIB UK has an induction process for new Non-Executive Directors.  It is designed to ensure they are familiar with the business and its operations.  It comprises of relevant briefing material, details of the business’ strategic and operational plans and also includes a programme of meetings with key individuals such as the CEO and heads of business, as well as support and control functions. On appointment, new Directors are assessed to identify any individual development needs, the Secretariat keeps a log of the training each Director takes part in during the duration of their service; training is also provided regularly by AIB UK for the Board of Directors.

The Board of Directors undergo an annual effectiveness review to ensure that the board has sufficient knowledge and skill to perform their duties as Directors and to understand the bank’s activities and its main risks.  The review comprises individual appraisals of each director by the Chairman, and also considers whether individual members have the capacity to commit sufficient time to perform the duties expected of them.

The Board appoints an external assessor to complete an independent review of board effectiveness and governance at least every three years.

Where knowledge and skills gaps are identified, these are discussed and development plans are put in place to address them.

To ensure there are no conflicts of interest and that each Board Member is committing sufficient time and effort to their prescribed duties, AIB UK ensures that Board Members do not hold more than one of the following combinations of directorship in any organisations (except for not for profit organisations) at the same time:

• One Executive Directorship with two Non-Executive Directorships.
• Four Non-Executive Directorships.

AIB UK recognise that some Directors may be appointed to the Board of an organisation which requires them to act as a Director/Member for a number of subsidiary entities or other related Boards/Committees (e.g. Pension Fund Trustee, Charity Committee etc) For the avoidance of doubt, AIB UK considers these types of appointments to count as one collective appointment when considering the above restriction. The Nomination and Corporate Governance Committee may, from time to time, consider if any external appointment is affecting the way in which a Director carries out his/her duties and take appropriate action.

AIB UK also has a policy in place to ensure that the Chairman of the Board does not simultaneously exercise the CEO function.

Each individual member of the Board is asked twice a year to disclose their directorships with other institutions and provide all the necessary details, which are double-checked against records held at Companies House and other relevant registration bodies.

AIB UK has also established a Nomination and Corporate Governance Committee which is made up of Non-Executive Directors.

The responsibilities of the Nomination and Corporate Governance Committee include:

• Undertaking appropriate search and interviews for new Non-Executive Directors, in accordance with the Board’s succession plan.
• Recommending candidates to the Board for appointment as Directors.
• Reviewing the size, structure and composition and diversity of the Board.
• Preparing a description of the roles and capabilities for a particular appointment, including any required time commitments.
• Considering the Board’s approach to all corporate governance related developments and how these are demonstrated in the Board’s formal governance procedures and each Board Committee’s Terms of Reference.

The search for suitable candidates is a continuous process.  Recommendations for Board Membership are based on merit and objective measurable criteria following a vigorous appraisal and interview process to ensure candidates are of sufficiently good repute and possess the required knowledge, skills and expertise to perform their duties.

The Nomination and Corporate Governance Committee engages a broad set of qualities and competencies when recruiting members to The Board of Directors.

Where necessary the Nomination and Corporate Governance Committee are able to seek outside independent advice at the expense of the business.

The Nomination and Corporate Governance Committee have issued a policy statement promoting gender equality and diversity on the Board, this includes a clear target and plan to address gender imbalance.  The policy is attached.

The final Remuneration Committee meeting took place in December 2017 following a decision to disband the Committee as recommended by the Board approved Governance Review. The responsibilities of the Committee were reallocated appropriately to Group HR, the Group Remuneration Committee, the Board Audit Committee and Board.  

AIB UK complies with the Remuneration Code as prescribed by the PRA & FCA.

AIB Group (UK) plc is a company incorporated in Northern Ireland and is authorised by the Prudential Regulation Authority (PRA) and regulated by the Financial Conduct Authority (FCA) and the PRA under the Financial Services and Markets Act 2000 (FSMA) to carry on a wide range of regulated activities, including accepting deposits.  It carries on business under the trading names ‘Allied Irish Bank (GB)’ and ‘Allied Irish Bank (GB) Savings Direct’ in Great Britain, and ‘First Trust Bank’ in Northern Ireland.

AIB UK subscribes to the Lending Code of the Lending Standards Board, which is a self-regulatory code setting minimum standards of good practice in relation to lending, including loans, credit cards and current account overdrafts.

First Trust Financial Services Ltd (formally known as First Trust Independent Financial Advisors Limited) is authorised by the FCA to advise on and arrange certain investments, including pension, life policies, securities and non-investment insurance contracts.  The FCA is responsible both for the prudential supervision and for the general supervision of First Trust Financial Services Ltd’s business in the UK.

First Trust Financial Services Ltd ceased providing financial advice in December 2012.  First Trust Bank has entered into an arrangement with Legal and General whereby financial advice will be provided to the bank’s customers under an appointed representative arrangement.

This statement applies to all AIB UK entities.

Approach to risk management and governance arrangements in relation to UK taxation

Ownership of tax risks resides with the Boardand our governance ensures that suitably qualified people are involved in decisions related to tax.

We seek to fully comply with our tax filing, tax reporting and tax payment obligations. However, given the size and complexity of the organisation and our volume of tax obligations it is not possible to completely eliminate tax risks. In order to mitigate these risks a number of policies and procedures are in place to manage tax risk and form part of the broader framework for risk management across the Group. Central to this is our Tax Risk Management Framework (Framework) designed to identify, manage and report tax risks.  The Framework and the policies, standards and guidelines associated with the operation of the Framework are applicable to all employees of AIB and to all AIB Group entities. From time to time we may seek external advice in relation to significant transactions or areas of uncertainty.

We adopt a “three lines of defence” approach to managing tax risk. Generally the business management functions perform a first line of defence and are primarily responsible for ensuring that the Framework and associated policies are communicated, implemented and operate effectively within their business units. Second and third lines of defence are performed by Group Tax and Group Internal Audit respectively.

Tax planning and tax risk

AIB’s strategic ambition is

• to be at the heart of customers’ financial lives by always being useful, always informing and always providing an exceptional customer experience.
• to deliver a bank with compelling, sustainable capital returns and a considered, transparent and controlled risk profile.

Our tax risk appetite is aligned to the strategy. We aim to balance the needs of, and obligations to, our stakeholders, including shareholders, customers, regulators and tax authorities.  We do not have any appetite for breaches of tax law, engaging in abusive or artificial tax planning or engaging in any action of tax evasion.  

We have adopted, and comply with, the requirements of HM Revenue & Customs (HMRC)'s Code of Practice on Taxation for Banks. Accordingly, we do not promote or engage in tax planning that does not support genuine commercial activity or give rise to results inconsistent with the underlying economic consequences of the transactions concerned. Any promotion of tax advantaged products is limited to those where the tax consequences are consistent with the intentions of UK Parliament.

We remunerate our employees such that the proper amounts of tax and social security contributions are paid on the rewards of employment.

Relationship with the tax authorities

We proactively engage with HMRC to maintain an open and transparent relationship. This includes discussing, on a real-time or near real-time basis, key developments in our business and the associated potential impacts and may involve disclosing and seeking to resolve a known issue prior to the filing of the relevant tax return.

In the event of differing views we will work constructively with HMRC with an aim of achieving early resolution.

AIB regards the publication of this tax strategy as complying with the duty under paragraph 16(2) of Schedule 19 of the Finance Act 2016 to publish the UK group tax strategy in the current financial year.