Bank boards and women – big improvement since the credit crunch but a long way to go
The proportion of women on the boards of UK banks has increased by two thirds since the credit crunch but is still only 20% of all directors, reveals research by Astbury Marsden, a leading financial services recruitment firm (see graph below).
Representation of women on the boards of UK banks now lags behind that of the biggest continental European banks where women now make up 25% of directors – up from just of 10% directors in 2007, before the credit crunch.
Whilst all sectors are being encouraged to increase the representation of women on their boards the banking sector is under unique pressure to ensure its boards are more diverse.
There has been debate over whether the boards of banks were too “homogenous” before the credit crunch making them more susceptible to “group think”. It has been argued that this meant Bank boards were less able to make an objective and critical analysis of the strategies that the banks were following and the risks that they were building up.
It has also been suggested that male executives in banks have a more excessive appetite for financial risk than females.
Comments Mark Cameron, Chief Operating Officer, of Astbury Marsden: “Whilst the jury is still out on some of these theories it is now widely accepted that we need a much greater representation of women on boards and at other senior levels within banks.”
“UK banks recognise this problem and they are gradually closing the gap. More effort is going into mentoring women throughout the ranks and making sure they take advantage of executive training.”
Astbury Marsden says that UK banks are not too far off the target set by Lord Davies in the “Women on Boards” initiative, which encourages FTSE 100 companies to aim for their board of directors to consist of at least 25% women by 2015.
Adds Mark Cameron: “Financial services companies have really embraced the idea of drawing from as a wide talent pool as possible and having a more diverse board. But they definitely do not want the issue of boardroom diversity to become another box ticking exercise, to be a quota they have to fill. There is the worry that once banks are set targets on gender representation then they might be pressured to hire women directors for their gender rather than because they will bring the best skills to the job.”
The largest global investment banks lag behind the biggest, more diversified, UK and European banks with just 10% of their boards made up of women.
Mark Cameron says that historically women have found it easier to progress in retail and commercial banking than in investment banking. That may be because the long-hours culture in investment banking causes problems for women who also have child caring responsibilities. Historically, the trading floor environment of some firms has also been seen as alienating.
Adds Mark Cameron: “Recruiting on the basis of the old school tie is out. The alumni networks of Business Schools are now where the power lies and there you can see a participation rate of women of around 40%. On that basis the future is looking bright.”
Chinese bank boards historically more diverse – Japanese banks least diverse
Chinese bank’s have historically had a comparably high proportion of women directors, 18% in 2007 when the proportions in Western banks were far lower.
China has had a longer history of high participation rates by women in the labour force and in politics than in some Western countries. As many of the larger Chinese banks originated as State Owned Enterprises you might also expect a closer adherence to an espoused policy of equal opportunities than there might be in private sector organisations. However, the growth in the representation of women on the boards of Chinese banks has been relatively modest recently.
By contrast Japan presently has no women on the boards of their largest five banks (by assets).
Percentage of female directors on the boards of the Top 5 banks per category
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