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Ahead of international women’s day, the European Banking Authority (EBA) published new data on gender diversity. It finds that, despite improvements, there is still a big imbalance in how men and women are represented at the managerial level at financial services firms.
Based on a survey of 662 credit institutions and 129 investment firms, the EBA found that “the representation of women and men in boards is insufficiently balanced”.
Specifically, 27.8 percent of non-executive directors and 18.1 percent of executive directors are women at the institutions surveyed.
The number of male executive directors “by far exceeds” the number of female executive directors, the report points out.
Meanwhile, only 11.3 percent of the CEO positions are held by women and 10.4 percent of the chairpersons are female.
Gender balance is generally better in Northern and Eastern Europe than in other parts of the EU.
These figures show “gradual improvements”, although “still at a very low level”, according to the EBA.
This is despite the fact that the EBA spotted a clear positive correlation between gender balance and return on equity (RoE).
For instance, credit institutions with a good balance of male and female executive directors register on average 7.88 percent RoE, compared with 5.27 percent in those credit institutions without such a balance.
“More diverse management bodies can help to improve their decision-making regarding strategies and risk-taking by incorporating a broader range of views, opinions, experiences, perceptions, values and backgrounds,” the report says.
“A more diverse management body reduces the phenomena of ‘groupthink’ and ‘herd behaviour’.”
EU regulations require credit institutions and investment firms to adopt diversity policies and take into account diversity when selecting members of the management body.
They are also legally obliged to apply gender-neutral remuneration policies and to monitor the gender pay gap.
The new report shows that women earn on average 9.4 percent less than male executive directors and 5.9 percent less than male non-executive directors. This is without considering the salaries of the CEOs, which are typically higher than that of other board positions, and are typically held by men.
The authority notes that these calculations do not take into account other factors, such as the length of professional experience or educational background.
Additionally, the EBA lamented that 27.1 percent of the financial institutions surveyed still lack the mandatory diversity policy.
The EBA suggests that competent authorities should review as part of their supervisory review process if institutions' remuneration policies are gender neutral as required under EU directives.
“It is important that competent authorities review institutions’ diversity policies and their implementation, including the recruitment processes for members of the management body and take appropriate measures where shortcomings are identified,” the EBA said.
In the US last year, Wells Fargo was caught conducting fake interviews to meet diversity obligations.
In June, a whistleblower told the New York Times that the bank had undertaken interviews with minority and female applicants while the positions were already promised to other people. The US bank is reportedly under criminal investigation in the state of New York over these practices.
