Women leaders are good for business, says EU bank watchdog

LONDON (Reuters) – Two thirds of smaller banks typically have only men as executive directors, while lenders with men and women in top roles were likely to be more profitable, the European Union’s banking watchdog said on Monday.

Under EU rules from 2013, banks are required to have a policy on diversity that looks at gender, age, professional and educational background. Big lenders are also required to set a target for an under-represented gender, in practice women.

The European Banking Authority (EBA) looked at data from 834 banks for 2018, saying the level of compliance with the EU rules was at times alarming.

“Despite the legal requirements, a significant proportion of institutions, 41.6%, have still not adopted a diversity policy and not all institutions have a policy to promote gender diversity by setting a target for the under-represented gender,” the EBA said in a report.

It was not satisfactory that half of the major banks looked at had no female members of the management body in an executive function, it said.

Data on management pay showed that in most firms, men were paid more than women, the EBA said.

“Credit institutions that have executive directors of both genders seem to have a higher probability of having a return on equity at or above the average of 6.42% than credit institutions with executive directors of only one gender,” the EBA said.

It said different roles alone cannot explain differences in pay, which are more clearly visible for non-executive directors than for executive directors.

The watchdog said it will consider the need to issue guidelines on improving diversity.