Commentary Gender Diversity at European Banking Boards: Still a Long Way to Go
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Commentary
Gender Diversity at European Banking Boards: Still a Long Way to
Go
DBRS Morningstar Summary
22 February 2021
Gender diversity has become an increasingly important issue for the banking sector, particularly as
ESG factors have grown in importance for investors when evaluating banks. Despite recent
Kevan Viagas changes, women still represent less than a third of board membership at European banks.
Financial Analyst - Global Financial
Institutions Group
Representation is especially low at the Chief Executive position, with only 6 women at the helm of a
+44 20 3356 1526 sample of 53 banks across Europe. In order to accelerate representation at the highest level, some
kevan.viagas@dbrsmorningstar.com countries have introduced country-wide board-level quota legislation, whilst other geographies
Nicola De Caro have found more success in implementing bank-specific policies aimed at improving representation
Senior Vice President - Global FIG at the individual institution.
+49 69 8088 3505
nicola.decaro@dbrsmorningstar.com
Whilst quotas may go some way to reducing inequality, in isolation they are unlikely to be
Elisabeth Rudman sufficient. We believe that progress will continue to be hindered unless regulatory efforts are
Managing Director, Head of European FIG -
Global FIG compounded by effective and measurable internal bank policies.
+44 20 7855 6655
elisabeth.rudman@dbrsmorningstar.com
This research forms part of DBRS Morningstar’s ESG analysis, encompassing both the credit risk
factors and also the sustainability factors relating to ESG. With increased scrutiny from regulators
and investors on gender diversity, DBRS Morningstar considers banks face reputational risk and the
possibility of future regulatory pressure, if they fail to progress in this area.
Low Levels of Female Board Representation in Banking Industry
Whilst there have been increases over the past 5 years, women remain significantly
underrepresented on banking boards. On average in our sample of 53 European banks, women
represent 32% of board membership, as opposed to 22% in 2014. Boardroom parity would be
reached by c. 2030, if we were to assume the average 2014-2019 growth rate remains steady.
Portugal lags significantly behind the average at 19%, whereas Norway and Sweden reported the
highest female representation at board level (Exhibit 1).
Norway and Sweden are also among the few countries in our sample with female representation at
the Chief Executive level. Out of the 53 banks, only 6 have a female Chief Executive: DNB ASA
(Norway), Svenska Handelsbanken (Sweden), NatWest Group (UK), Bank of Ireland (Ireland), Banca
Nazionale del Lavoro (Italy) and Bankinter (Spain), whilst just three, DNB ASA (Norway), Banco
Santander (Spain), and Banca Monte dei Paschi (Italy) have a female Chairperson. This is in contrast
to the 51% female representation on average at the workforce level in 2019, and shows the
bottleneck at the upper levels of management.Page 2 of 8 Gender Diversity on European Banking Boards: Still a Long Way to Go | 22 February 2021
Exhibit 1 % of Women at Board Level per Country
Average of Women Board Members % - 2014 Average of Women Board Members % - 2019
Sample Average 2019 2014-2019 Percentage Point Change
50
45 0 5 12 17
40 24 -6 11
35 7 16 10 -5
30 7
25
9
20
15
10
5
0
Source: DBRS Morningstar, Company Documents.
Denmark and Ireland, as well as being two of the countries with the highest levels of female
representation in FY19, were also amongst the jurisdictions with the largest increases over this
period, with increases of 17 percentage points (p.p.) and 24 p.p. respectively (Exhibit 1). Bank of
Ireland and Allied Irish Banks saw the highest increases over the analysed period, with increases in
excess of 30 p.p. (Exhibit 2). And the 3 banks in our sample with highest levels of female
representation, Crédit Agricole, Credito Valtellinese and Svenska Handelsbanken, all had increases
in excess of 20 p.p. (vs. the sample average of 10 p.p.). The least gender diverse boards in 2019
were largely comprised of Portuguese and Spanish banks.
Exhibit 2 % of Women at Board Level FY19 & Growth vs. FY14
FY19 Percentage Point Change FY14 - FY19
50
40
30
20
10
0
-10
-20
Credito Valtellinese
Rabobank*
Danske
BBVA
Sabadell
Lloyds
Banca Sella
Cajamar
Credit Agricole
Bank of Ireland
Credit Logement
Nordea
BMPS
Commerzbank*
BNL
DZ Bank*
Deutsche Bank*
Novo Banco
Montepio
Swedbank
Intesa
SEB
Nationwide BS
ABN Amro*
Handelsbanken
SG
DNB
Natwest
Sondrio
HSBC
Barclays
Caixabank
KBC
PTSB
CGD
Bankia
BNP Paribas
Allied Irish Banks
UBI
Unicredit
Abanca
Liberbank
ING*
Banco BPM**
Alto Adige
Bankinter
Pfandbreifbank*
Nord LB*
Iccrea
BCES
BPCE*
Santander
BCP
Source: DBRS Morningstar, Company Documents, * Supervisory Board data used in conjunction with Management Board data; ** Banco Popolare used as proxy for FY 2014 data.Page 3 of 8 Gender Diversity on European Banking Boards: Still a Long Way to Go | 22 February 2021
National Legislation & Individual Country Experiences
International banking regulators have largely avoided setting punitive diversity legislation, instead
focusing on setting diversity targets in action plans. In February 2020, however, the European
Banking Authority (EBA) published a report 1 on diversity in credit institutions and investment firms.
The results showed low representation of women in management bodies (15% as of 2018), and
stated that 2/3 member institutions had executive directors of only one gender. The EBA report
included a call for more measures to be taken at a national and institutional level to improve gender
diversity, as they believe a more diverse workforce aids with "decision-making regarding strategies
and risk-taking by incorporating a broader range of views, opinions, experiences, perceptions,
values and backgrounds".
One of the legislative measures used at a national level has been the imposition of gender quotas
for boards 2. Of the top 5 most gender diverse countries in our sample, two have imposed quotas,
those being France and Norway. The origins of the Norwegian board quotas stem from similar
policies enacted in Norwegian politics, which has served to increase female participation.
Summaries of these quotas, amongst others, can be seen below:
Table 1 Examples of Board Level Quotas
Implementation
Country Requirement Potential Penalty
Year
Norway 2008 Listed companies to have at least 40% female directors Potential penalty of dissolution
2011; Revised in Requires companies with 500+ employees and revenues over EUR 50
France Noncompliance risks voided appointments
2014 million to have a minimum of 40% of females on their board of directors
Listed companies with 250+ employees to have at least 40% female Risk losing public contracts and/or Government
Spain 2015
directors Subsidies
30% female participation on supervisory boards of large, publicly listed Vacated board seats may remain vacant until filled
Germany 2016
companies by a woman
If the quota is not met within a four month grace
Requires listed companies to have at least 30% female representation
Italy 2011 period, companies can be charged a fine of up to
on their boards
€1,000,000
In 2013, large companies were to set an optional target of 30% of the
2013; Revised in Vacated board seats may remain vacant until filled
Netherlands seats of the company’s management and supervisory boards to be
2020 by a woman
women. This was made mandatory for listed Dutch companies in 2020.
Source: DBRS Morningstar.
The mechanism of quotas allows for internal targets to be set at a specific, numerical level, and
reduces the possibility of overly broad objectives. Whilst this has gone some way to reducing
gender disparity at senior levels, the imposition of gender quota type legislation suffers from two
main weaknesses. Firstly, gender quotas are often unenforced, and usually do not carry sanctions
for noncompliance. By treating this as a “soft” law, companies have reduced incentives to improve.
1
https://www.eba.europa.eu/eba-calls-measures-ensure-more-balanced-composition-management-bodies-institutions.
2
For geographies with two-tier banking systems, the regulatory point of reference is generally the supervisory board, as opposed to the
management board.Page 4 of 8 Gender Diversity on European Banking Boards: Still a Long Way to Go | 22 February 2021
Secondly, the imposition of quotas is concerned with the result, as opposed to the means behind it.
By setting a fixed threshold, quotas do not address the reason behind the inequality.
Unlike other Scandinavian countries, neither Finland nor Denmark impose quotas on board
membership. Instead, the Finnish Government funds programs that help develop the skills of female
members of the workforce, and to further prepare them for potential board membership. The
Ministry of Social Affairs and Health also implements an action plan for gender equality.
Meanwhile, Denmark requires its largest companies to maintain policies on how they will attain
executive management-level gender diversity. These policies require companies to report their own
achievable target of board composition in a 4 year timeframe. The reports must also indicate current
progress and describe measures taken to achieve their target.
Both of these approaches address the issues outlined in the February 2020 EBA report of female
underrepresentation in management. This is done through a focus on career development, and
sustainable growth of female representation at senior levels, as opposed to focusing on the end
result.
Example of Bank Policies: DNB ASA
DNB ASA (DNB) has a target of 40% of the top 4 levels of management being comprised of women,
and having pay parity. These efforts are tracked and updated annually, whilst also being supported
by internal talent development. In addition, DNB has changed their hiring practices to try to
eliminate some of the disparity between sexes, including a requirement to have the final two
candidates for a position to be male and female. Policies such as this have aided DNB in reducing
the gender pay gap and gender disparity in management, with both metrics narrowing since 2014
(Exhibit 3).
Exhibit 3 DNB Progress vs. Gender Targets
Female Salary vs. Male Target Female Proportion in Top 4 Management Levels Target
100.0% 40%
97.5% 39%
95.0% 38%
92.5% 37%
36%
90.0%
35%
87.5%
34%
85.0%
33%
82.5% 32%
80.0% 31%
77.5% 30%
75.0% 29%
2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019
Source: DBRS Morningstar, Company Documents.Page 5 of 8 Gender Diversity on European Banking Boards: Still a Long Way to Go | 22 February 2021
ESG Factors in DBRS Morningstar Rating Analysis
DBRS Morningstar evaluates and incorporates 17 ESG credit risk factors in the assessment of its
credit ratings across Governments, Financial Institutions, Corporate Finance, and Structured
Finance. DBRS Morningstar's Financial Institutions Group considers 12 of these factors in its
assessment of credit ratings. DBRS Morningstar considers how ESG risks affect the issuer and
transaction-specific ratings during the life of the transaction/rating. As with all of DBRS
Morningstar’s credit analysis, evaluation of the factors’ impact is forward looking—relevance
reflects the factors’ impact in the future, which may not necessarily be the same as it might have
been in the past.
This is relevant for gender diversity, as whilst this may have been a less prominent concern for
regulators and stakeholders in the past, its importance has grown. DBRS Morningstar considers
gender diversity within banks' boards to fall under the Governance ESG factor, particularly under
the "Corporate Governance" factor, alongside the Social ESG Factor. We consider an institution's
relation to its community of stakeholders as key in maintaining reputational standards, particularly
as calls grow for more diverse workforces. A stronger reputation can enhance a financial
institution's franchise, while a lack of progress could eventually lead to a loss of clients.Page 6 of 8 Gender Diversity on European Banking Boards: Still a Long Way to Go | 22 February 2021
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Factors in Credit RatingsPage 7 of 8 Gender Diversity on European Banking Boards: Still a Long Way to Go | 22 February 2021
European Banks List by Country
Belgium
KBC Group NV
Denmark
Danske Bank A/S
Finland
Nordea Bank AB (publ)
France
Groupe BPCE
Crédit Agricole Group
Société Générale SA
BNP Paribas SA
Crédit Logement
Germany
Commerzbank AG
Deutsche Pfandbriefbank AG
Deutsche Bank AG
DZ Bank AG
Norddeutsche Landesbank Girozentrale
Ireland
Permanent TSB Group Holdings plc
The Governor and Company of the Bank of Ireland
Allied Irish Banks, p.l.c.
Italy
Banca Sella Holding SpA
Banco BPM SpA
Banca Monte dei Paschi di Siena SpA
Credito Valtellinese SpA
Intesa Sanpaolo SpA
Unione di Banche Italiane SpA
UniCredit SpA
Banca Popolare di Sondrio S.C.p.A.
Banca Popolare dell'Alto Adige S.p.A.
Banca Nazionale del Lavoro SpA
Iccrea Banca SpA
Netherlands
ABN Amro Group NV
ING Groep NV
Coöperatieve Rabobank U.A.
Norway
DNB ASA
Portugal
Banco Comercial Português, S.A.
Caixa Geral de Depósitos, S.A.
Novo Banco, S.A.
Caixa Económica Montepio Geral
Spain
Abanca Corporación Bancaria S.A.
Bankia SA
Bankinter SA
Banco Bilbao Vizcaya Argentaria, S.A.
Caixabank SA
Grupo Cooperativo Cajamar
Liberbank SA
Banco de Sabadell SA
Banco Santander SA
Banco Cooperativo Español S.A.
Sweden
Svenska Handelsbanken AB (publ)
Skandinaviska Enskilda Banken AB
Swedbank AB (publ)
UK
Barclays Bank PLC
HSBC Holdings plc
Lloyds Banking Group plc
Natwest Group plc
Nationwide Building SocietyPage 8 of 8 Gender Diversity on European Banking Boards: Still a Long Way to Go | 22 February 2021
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