EU watchdog to tackle banks with too few women on boards

Preview of the illumination at ECB headquarters for the Euro's 20th anniversary in Frankfurt
A symphony of light illuminates the south facade of the European Central Bank (ECB) headquarters in Frankfurt, Germany, December 30, 2021. REUTERS/Wolfgang Rattay

LONDON, March 7 (Reuters) - The European Union's banking watchdog said on Tuesday it will crack down on the 28% of banks it found to have failed to implement a mandatory policy on boardroom diversity.

The European Banking Authority (EBA) said data collected at the end of 2021 from nearly 800 banks and investment firms showed that women account for only 18% of executive and 28% of non-executive directors.

Women earned on average 9.5% less than male executive directors, and 6% less than male non-executive directors.

Banks have been required since 2014 to have a policy on diversity, but 28% still do not have one, the EBA said. While banks are allowed to set their own targets for women on boards, some EU states have adopted national laws with targets.

"We will take action here and look at what national supervisors are doing," Bernd Rummel, senior policy expert at the EBA, where women make up 60% of the directors.

"It's important that all banks adopt diversity policies and have their own targets. This needs to be 100%," Rummel said.

"The gender balance is gradually, but too slowly improving," said the report by the EBA.

EBA Diversity Graphic 2

Larger banks, and banks from northern and eastern Europe fare better on diversity, perhaps linked to better childcare facilities in those countries.

Nearly half of the banks sampled had no female executive director, even though firms with gender diversity have a higher-than-average return on equity of 7.9%, compared with 5.3% for those with only male executive directors, the EBA said.

Other types of diversity, such as educational or social backgrounds, could also be improved, the EBA said.

Most firms with activities in other parts of the world had directors which reflected this, the report said.

The EU has just approved a law requiring at least 40% of non-executive board members at listed companies to be women from mid-2026.

EBA Diversity Graphic 1
Reporting by Huw Jones; Editing by Alexander Smith

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