EBA noted the painfully slow progress of banks and investment firms in improving gender diversity policies and announced it wants supervisors across the EU to crack down on those non-compliers
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The European Banking Authority (EBA) published its report on diversity practices and the gender pay gap at the level of the management body, urging supervisors across the EU to crack down on banks and investment firms who do not promote diversity enough.
The research published by the EBA revealed that 27% of almost 800 European banks and investment firms had still not created the proper diversity policies, although they became a legal requirement almost a decade ago.
Moreover, their top management teams and supervisory boards remain almost 75% male, while European financial firms continue to pay men more than women for their services.
Compliance with diversity policies was better among larger institutions (94%). However, the EBA criticised large banks’ approach to setting mandatory targets, as nearly 40% have set ‘very low’ goals.
For instance, some institutions aspired to less than 25% female representation on boards. This is one of the reasons why the total women’s representation on supervisory boards remains at 26%, while women account for only 18% of banks and investment companies’ executive directors. The percentage of female chief executives in European financial institutions stands at 11%.
Therefore, the EBA now wants to use supervisory powers to force banks and investment firms to comply with gender diversity rules. These can include higher capital requirements and restrictions on non-compliant businesses. If a bank would repeatedly violate its diversity obligations, ‘the measures taken by supervisors will get harder’.
Besides working on equal representation, the EBA also wants supervisors to examine the companies’ gender pay gap. The current review found that female executive directors earned on average 9.5% less than their male peers, not to mention the pay gap among CEOs. Female non-executive directors earned almost 6% less.
The issue of income inequality illustrates not only wealth gaps, but also power distribution within any given society in general and separate industries in particular. Not only are women under-represented in senior positions within all types of organisations and private firms, but also the widest gender pay gap traditionally exists in finance and insurance, public administration, professional, scientific and tech services.
EBA diversity rules were one of the many global initiatives to mandate banks and other financial services companies to address the largely white, male, and middle-aged profile of their boardrooms and executive committees.
