Daily Management Review

EBA Finds Alarming Compliance Results For Gender Diversity Among Banks


Having women executive increases the chances of “a return on equity at or above the average of 6.42%”.

According to the EU banking watchdogs, lenders with women and men both in their top executive positions had better chances of being a profitable while two thirds of smaller banks had only men in their executive ranks.
As per EU rules, from 2013 banks need to have gender diversity oriented policy which did not discriminate on the basis of “age, professional and educational background”. In fact, big lenders also need to promote women employment. The EBA or the “European Banking Authority” went through the 2018’s data of “834 banks” and found that the compliance with EU rules looked alarming at times.
As per an EBA report:
“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”.
According to the report, the results were not at all satisfactory as 50% of the major lenders had “no female members of the management body in an executive function”. Furthermore, data also revealed that in most of the banks, men were given higher salaries in comparison to women. While, the EBA added:
“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”.
EBA clearly stated that the differences in pay cannot be alone decided on the basis of the different role as among the executive directors this is not as clearly mentioned. EBA could further consider the option of introducing “guidelines on improving diversity”.