A group of four women and three men smiling at the camera in an office setting.

“No one believes the playing field between men and women is level, and when you bring in other factors such as race, ethnicity and disability, it becomes even more biased.”

Despite gains at the boardroom level, women are still largely absent from the executive level within European banks. So, what will move the needle? Anita Hawser investigates.

It is not easy being the CEO of a bank at the best of times, let alone if you are one of the few women to have attained such a lofty position. For the few women that actually get that far, the top job often comes with increased scrutiny, expectations and pressure to perform. These women are also expected to be ‘lighthouses’ or ‘beacons’, showing the path to the top for the women at lower levels who aspire to the role of CEO.

But these beacons are in short supply. According to the Official Monetary and Financial Institutions Forum’s 2022 Gender Balance Index, while the proportion of female CEOs at commercial banks increased from 6% to 14%. This means that just 46 of the 335 institutions (central banks, commercial banks, public pension funds and sovereign wealth funds) it ranks are run by women.

“No one believes the playing field between men and women is level, and when you bring in other factors such as race, ethnicity and disability, it becomes even more biased,” says Ann Cairns, executive vice-chair at Mastercard.

Ms Cairns has run many banking and financial services businesses, including ABN Amro’s transaction bank in the early 2000s, and is heavily focused on inclusion, diversity and innovation. “Today, women and men are graduating in roughly similar numbers — in some countries, including Britain, women are graduating at a higher rate,” she notes.

“Isn’t it time then that we saw more women making it to the top of financial institutions? Surely some of the best and brightest are not making it through to the C-suite today. There are female bank CEOs in the Nordics, but at the top 50 European banks there are only five [female] CEOs. Why?”

Ms Cairns says some blame can be laid at the board level with nomination committees preferring to appoint CEOs with CEO experience. “That certainly narrows the playing field,” she says, “especially for women who have faced appointment challenges for many years.”

The 2023 EY European Financial Services Boardroom Monitor, which tracked the profile, experience, training and skill sets of board directors of 77 banks in the MSCI European Financials Index, found that while 62% of male board members at financial companies either held or hold a C-Suite role, this figure was only 51% for current female board members. The Female FTSE Board Report 2022 published by Cranfield University found “an alarming lack of women in executive roles”. Only 17% of female board directors in the FTSE 100 currently hold executive director roles. 

Boardroom advances

Women may not be making much headway at the executive level, but according to EY’s Boardroom Monitor, they are making inroads in the boardroom. It found that the current gender split of board members was highest across bank and insurance boards, where 42% of board members are female and 58% male — a five-percentage point rise in the share of female board members from June 2022, when the gender split was 63% male and 37% female. 

“Just looking at new board appointments made over the past year, they’ve been evenly split by gender,” says Omar Ali, managing partner for Europe, the Middle East, India and Africa financial services at EY. ”So, the number of female board appointments is accelerating. I wouldn’t be surprised if most European financial services bank boards achieve gender parity by 2026.” 

So, what is behind this acceleration? One reason, says Mr Ali, is the increased expectation from investors and the customers they serve. Of the European financial services investors EY surveyed, 44% stated that gender diversity in the boardroom significantly influences their decision to invest in a financial services company, compared to just 16% who said it had no influence at all. “There are several factors playing out at the same time,” Mr Ali explains.

“There’s the expectation that companies should reflect the society they live in. Then you’ve got investor expectations and regulatory requirements. Combined with that, we’re seeing progressive financial services firms recognise that they must do more, and the results, certainly since we started tracking it [2022], suggest they’re on the right path.”

Other research, however, is less bullish about the progress being made at the board level of European banks. Research carried out in 2021 by credit rating agency DBRS Morningstar, found that on average, only 37% board member seats at the 43 European banks surveyed were occupied by women — this number decreased to 26% when looking at women on executive management teams. DBRS research also revealed significant discrepancies across Europe, with Nordic countries having the highest level of gender diversity on their boards, while countries including Germany and Portugal had the lowest female representation. In EY’s Boardroom Monitor, Germany had the lowest gender split for banks — 38% of women on boards compared to 51% for the Nordics and 43% for southern Europe.

These variations can be partially explained by the different approaches EU countries take to gender diversity. According to the non-profit organisation European Women on Boards, only six EU countries (France, Italy, the Netherlands, Belgium, Austria and Germany) have introduced hard quotas to encourage more balanced gender representation at board level. In 2021, France also implemented the Rixain Law (named after the French politician, Marie-Pierre Rixain), which requires executive committees at French companies with more than 1000 employees to have 30% female representation by 2027 and 40% by 2030.

Other countries have opted for softer targets. The UK has not implemented hard quotas, but under its ‘comply and explain’ approach, the Financial Conduct Authority requires listed companies to disclose against targets, including 40% female representation on their boards. 

Nobody wants to be a quota

But what works best, hard quotas or soft targets? Marie-Sybille Connan, senior stewardship analyst at Allianz Global Investors and chair of the 30% Club’s France Investor Group, which promotes gender diversity within the executive management of SBF 120 stock index companies, says quotas help raise awareness. “But in terms of representation of women on executive committees [in France], compared to the percentage of women in the workforce, there is still a long way to go,” she says. Although women make up approximately half of the workforce in France, they only account for 21% at the executive level and just 8% at CEO level, according to figures published by European Women on Boards.

Targets, rather than quotas, create cultural change faster

Ann Cairns

In Iceland, the most gender-equal country in the world according to the World Economic Forum’s 2022 Global Gender Gap Report, legislation requires a minimum of 40% of either male or female board members for listed companies, as well as companies of a certain size. Although the Icelandic challenger bank Indó is not subject to the legislation, its CEO Haukur Skúlason is aiming for this 40% minimum on the board, “because it brings different viewpoints, opinions and logic to the table, and that can never be a bad thing”.

But while everyone knows and respects quotas, and understands their importance, he is concerned the way the legislation is set up now increases the risk of appointing women solely as token appointments. “I know of many cases where this has been the case and women are excluded from the actual discussions and decision making,” he says. Mare Heinluht, head of diversity and inclusion at Swedbank in Sweden, says nobody likes the word ‘quotas’ and nobody wants to be a quota. “It really is borderline insulting,” she says.

So, if hard quotas aren’t the answer, what is? “Targets, rather than quotas, create cultural change faster,” suggests Ms Cairns. “Voluntary adoption means a lot of top-down support, plus there isn’t the stigma of ‘She’s a quota appointee’.”

Michael Ilgner, global head of human resources and real estate at Deutsche Bank, says targets are the right means of having a differentiated ambition, and to increasing effort and focus on gender diversity. Having set a target in 2017 of reaching 20% female representation on its management board, which it achieved last year, the bank also set a target (35%) for female representation at the upper management levels — managing director, director and vice-president — which it hopes to achieve by 2025. “Our goals are ambitious and there is still a lot to do,” says Mr Ilgner. “There will be times when we may not meet our targets in some areas, but we’re convinced it’s the right thing to do.”

Deutsche Bank’s gender diversity targets are differentiated by line of business, and as Mr Ilgner explains, different approaches are needed in order to reach those targets. For example, it evolved its hiring practices in investment banking, including tapping new universities to widen its pool of potential candidates. Last year, the bank hired more female graduates (46%) in investment banking than it did three or four years ago. “It is one of our biggest achievements so far,” says Mr Ilgner, “But what works for investment banking may not work for technology, or other parts of the bank. It requires a differentiated approach to be successful.”

While targets are important, Mr Ilgner says that the women at his organisation “don’t just want to see numbers … They want to see that everyone takes diversity seriously. It’s not the women that necessarily need to change, but the organisational systems — particularly in areas where men dominate in terms of numbers.” That requires a cultural and mindset shift, he adds, and leaders need to be trained to recognise and challenge unconscious bias. 

No magic bullet for gender diversity

Christina Gadeberg, chief people officer at Nordea Bank, says diversity moves at different cadences in different parts of the organisation. The bank has a 60:40 split at board level, a 1:2 split at top management and a 45:55 split among its “people leaders” (all male:female).

“We do the best we can, but gender still comes with some sensitivity,” she adds. “We can have the best intentions, but younger generations joining us don’t look at gender as simply male or female, which is something we need to be aware of.” 

Gender equality is difficult, even in Sweden, which ranks first in the EU on the Gender Equality Index. “I’m not Swedish myself,” says Ms Heinluht of Swedbank. “But my Swedish female colleagues [tell me] we’re not even there yet: we don’t have equality, even though they live in one of the most equal countries in the world. So, no matter how far you get, there’s still a way to go.”

While there is no ‘magic bullet’ when it comes to diversity and inclusion, research carried out by Women on Boards UK suggests that seeing more women at the top can make a difference. Its 2022 Hidden Truth report, which looked at why some companies in the FTSE All-Share ex-350 were more ahead on gender diversity than others, found that while having a female chair makes a difference (45% versus 32% if you have a male chair), it is not as much as if you had a female CEO (55% versus 13% if you had a male CEO). 

“You need to have role models so other women can see they have a chance to succeed,” says Mr Ilgner. But what also matters, he adds, is that women can prove they developed their career based on their qualifications and success. “When I talk to the top female leaders within the bank, they are proud and don’t want to be put in certain boxes. The more [women] you have, of course, the better it is. But it’s also important to show that there is no one-size-fits all career path to the management board and that differentiated approaches are needed.”

Ms Gadeberg says having more female CEOs won’t necessarily move the needle. “It’s not focusing on the totality of the organisation. Maybe we need to put more effort into helping female talent, but we want diversity represented at all levels, and if we focus too much on one gender, I don’t think we will get there. It is about having a conversation around diversity, rather than gender, and the benefits of having a diverse team.”

So, perhaps it is more about the type of person at the top, and their style of leadership, rather than their gender. “We have several senior leaders in the bank who are really excellent sponsors and supporters for gender equality,” says Ms Heinluht. “They truly want to make a difference. I see them striving for that, even though it’s hard to find those female talents to nurture, especially if you’re in those parts of the business that are traditionally male-dominated.”

Gender and identity

But there are other factors that are starting to work in women’s and diversity’s favour, which could move the needle in a much bigger way. Increasingly, diversity is not just a question of gender. Bank boards are also seeking candidates with a deep understanding of cyber, digital, technology and sustainability, and the latter is one area in which women appear to excel, according to EY’s Boardroom Monitor, which found that 72% of all board members with sustainability experience are female. “With an increase in sustainability skills being placed on boards, this is acting as yet another catalyst for more senior female appointments,” says Mr Ali of EY.

we should allow for a third option and not just a binary system

Mare Heinluht

The prism through which equality and gender are viewed is also evolving as a new generation enters the workforce. An increased focus on Gen Z and how they view equality and gender identity should allow for a third option or gender to be recognised, says Ms Heinluht.

“This is something we are already taking into account as we look ahead and build awareness among leadership that the upcoming generation is very ‘queer’ (multiple surveys suggest Gen Z is the ‘queerest’ generation ever). This will affect things like how we measure gender balance, which should allow for a third option and not just a binary system.”

From a legal standpoint, few countries in the world recognise a third gender, but Ms Heinluht says companies need to start providing options for the self-identification of gender on a voluntary basis (and in a General Data Protection Regulation-compliant way). Swedbank took a first step last year, she says, by giving self-identify gender as a third option in anonymous employee surveys.

So, for any women wanting to make it to that C-suite role, the timing could never be better, says Ms Cairns. “Get all the support you can and then go for the dream job. Everyone wants to see women break through more, including governments and regulators and boards of banks. This is not just because it’s the right thing to do, it’s because it’s good for business.”


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