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Home > About Us > Non Executive Directors

Leeds Building Society
Non Executive Directors

 

Section 5

  ALCO Terms of Reference

Constitution

The Assets & Liabilities Committee ("ALCO") is a sub committee of the Board.

Membership

The ALCO shall comprise of the following members or be as decided from time to time by the Board. The membership of ALCO shall at all times include the Chief Executive, the Deputy Chief Executive, two non-executive directors and the Head of Group Treasury.

  • Chief Executive (Chairman)
  • Deputy Chief Executive
  • Non Executive Director
  • Non Executive Director
  • Non Executive Director
  • Director of Operations
  • GM Finance
  • GM Development
  • GM Market Planning
  • Head of Group Treasury
  • Assets & Liabilities Manager (Secretary)

The chairman of ALCO is appointed by the Board.

Quorum

For a quorum to be established, a minimum of 5 of the above members must be present, at least two of whom should be members of Board, of which one must be a non-executive director of the Society.

Attendance at Meetings

The members as outlined above should normally attend meetings.  In addition, other professional advisers and Society officers should be invited to attend depending on the agenda to be discussed.

Frequency of Meetings

Meetings should be held not less than on a monthly basis.

The Chairman of ALCO may also convene a special meeting of the Committee, if in his judgement an issue arises that cannot wait until the next regularly scheduled meeting.

Authority

ALCO has full responsibility for setting Financial Risk Management Policy, the implementation of Financial Risk Management Controls, the review of Financial Risk Management controls, and the uthorisation of proposals and recommendations brought forward from MALCO.

ALCO also provides an oversight role in relation to asset and liability management within the Society.

ALCO is authorised by the Board to investigate any activity within its set objectives, and to provide proposals and recommendations to the Board on these matters.

ALCO is further authorised to seek any information it requires from any employee, and all employees are directed to co-operate with any request made by ALCO.

ALCO is also authorised by the Board, if considered necessary, to secure the attendance of outsiders with relevant experience and expertise.

Objectives

The objectives of ALCO have been established as below:

1

 

 

 

 Financial Risk Management
a) Recommend for approval by the Board the Financial Risk Management Policy on at least an annual basis, including the review of Financial Risk Management controls;
b) Oversee the activity of the MALCO in their objectives; and
c) Monitor activity under the scope of the Financial Risk Management Policy to ensure adherence to set policies and limits.
     
2 Interest Rate View
  a) Receive the Society’s interest rate expectations as agreed by MALCO. Consider, an if it be determined, authorise any specific actions arising from MALCO agreed interest rate view;
  b) ALCO reserves the right, should it deem appropriate, in exceptional circumstances to ask MALCO to reconsider the agreed interest rate view on reflection of changed circumstances with regard to economic outlook and the interest rate environment;
  c) Monitor the use of interest rate derivatives used in the management of interest rate risk;
  d) Consider, and if it be determined, authorise any substantial periodic restructuring of the interest rate derivatives portfolio necessary to improve hedge effectiveness and/or to appropriately manage risk profile; and
  e) Consider, and if it be determined, authorise any changes to the Financial Risk Management Policy in respect of appropriate interest rate limits and sensitivity analysis, and regularly review the relevant Financial Risk Management controls in place.
     
3 Interest Rate Risk
  a) Set guidelines for the management of market value risk and earnings risk within the Core Portfolio in relation to the agreed interest rate view;
  b) Monitor the impact of basis risk on the net interest margin and authorise mitigating actions; and
  c) Monitor the impact of early prepayments and their effect on market value and earnings risk.
     
4 Credit Risk (pertaining to Treasury)
  a) Consider, and if it be determined, approve, under the delegated authority of the Board, new additions to the authorised list of investment counterparties;
  b) Regularly review on at least a semi-annual basis the authorised list of investment counterparties;
  c) Consider, and if it be determined, authorise any changes to the Financial Risk Management Policy in respect of credit and counterparty risk, and regularly review the relevant Financial Risk Management controls in place.
     
5 Funding
  a) Set the funding strategy parameters;
  b) Consider, and if it be determined, approve any changes that MALCO have recommended in respect to the composition of funding, and authorise any specific actions arising from MALCO; and
  c) Consider, and if it be determined, authorise any changes to the Financial Risk Management Policy in respect of funding, and regularly review the relevant Financial Risk Management controls in place, including the adequacy of liquidity stress testing scenarios and contingency funding plans in place.
     
6 The net interest margin and profit performance
  a) Review the MALCO report in respect to profit performance, and the variances from the planned net interest rate margin, and detail any required actions as appropriate; and
  b) Monitor the impact on net interest margin, reserves and profit from changes in the market value of liquid assets, derivatives and embedded derivatives under IAS 39 Accounting for Financial Instruments.
     
7 Liquidity Investments
  a) Consider, and if it be determined, approve any changes that MALCO have recommended in respect to liquidity investments, and authorise any specific actions arising from MALCO; and
  b) Consider, and if it be determined, authorise any changes to the Financial Risk Management Policy in respect of liquidity investments, and regularly review the relevant Financial Risk Management controls in place.
     
8 Capital Structure
  a) Consider, and if it be determined, approve any changes that MALCO have recommended in respect to the capital structure, and the capital investment strategy, including optimum duration for capital given the agreed interest rate view, and authorise any specific actions arising from MALCO; and
  b) Consider, and if it be determined, authorise any changes to the Financial Risk Management Policy in respect of the capital structure or the nature of the capital portfolio, and regularly review the relevant Financial Risk Management controls in place.
     
9 Other Matters
  a) Through the MALCO, liaise with the Marketing and Sales functions in order to provide guidance on appropriate product mix; and
  b) Decide upon appropriate recruitment, training and development for Board, ALCO, senior management, audit and treasury personnel to ensure the requisite skills are available to monitor and control risk.

Communication

The Secretary of ALCO will normally circulate the agenda and papers for meetings at least two days before the meeting.

Formal minutes, approved by the Chairman of ALCO, shall be submitted to the Board following each meeting of ALCO.

The Chairman will provide a verbal report on the activities of ALCO to be considered by the Board following each meeting of ALCO.

 

Nominations Committee Terms of Reference

Composition

  • The Committee is a sub-committee of the Board of Directors of the Society and operates on authority delegated to it by the Board and will report to the Board on its recommendations.


  • The Committee shall comprise the Chairman and Vice-Chairman of the Board of Directors, the Chief Executive and at least one other Non-executive Director.  A quorum of the Committee shall be three of its members.


  • The Chairman of the Board or, in his absence, the Vice-Chairman, shall be the Chairman of the Nominations Committee.


  • The Board of Directors is responsible for appointing additional or replacement members of the Committee following recommendations from the Chairman of the Board.


Terms of Reference

  • The Committee will meet at least 2 times per year and at such other times as the Chairman considers appropriate to consider prospective candidates to the Board.


  • The Committee will review the composition of the Board to ensure that it comprises, in accordance with Rule 24, a sufficient number of Directors who are fit and proper to meet the criteria of prudent management as set out in Section 45 of the Building Societies Act (the Act) and Section 3 ("Boards and Management") of the Prudential Sourcebook for Building Societies.


  • The Committee will consider the succession planning for the Board to ensure that there is continuity of the collective capability and capacity of the Board to meet the requirements of the Society's Rules, the Act and the Prudential Sourcebook issued by the Society's Regulator.  As part of these arrangements to meet this objective, the Committee will establish such lists of, and information about, potential eligible candidates as it considers appropriate.


  • Before any candidate is appointed to the Board, the Committee will appraise the candidate by reference to written and oral evidence (to include an interview of the candidate) to establish that they:
    • Enhance the constitution of the current Board, particularly with respect to the matters set out in Section 3 of the Prudential Sourcebook;
    • Meet the eligibility requirements set out in the Society's Rule 13, and the qualification requirement in Rule 14; and
    • Are fit and proper, specifically within the terms of Section 45(8) of the Act, and Section 3 of the Prudential Sourcebook.


  • The Committee will establish that details of proposed candidates are brought to the attention of the Society's Regulator.


  • If a member nominated candidate is considered to be not fit or proper as a director, the Committee shall ensure that this matter is brought to the immediate attention of the Society's Regulator and to the Membership prior to the election of the candidate.


  • If a membership candidate whom the Committee considers is not fit and proper is elected by the membership, the Committee shall ensure that this is brought to the immediate attention of the Society's Regulator and shall make arrangement for an immediate meeting of the Board of Directors to consider a request by the majority of Directors, under the Society's Rule 24, for the elected director to cease to hold office.


  • The Committee will make recommendations to the Board for the appointment of directors to the Society's subsidiary or associated companies, having regard to the aptitude, skill and qualifications of candidates.


  • The Committee will make recommendations to the Board in connection with the representations on behalf of the Society, by the Society's Directors or staff, on Trusts, Trade Associations or Other Formal organisations which are connected with the Society's business or reputation.


  • The Committee shall ensure that there are proper mechanisms in place for the communication of changes in Board composition to staff, the media, trade bodies and industry commentators.