Banking's gender gap exposed: ECB and IMF call for diversity revolution

Two senior members of the European Central Bank (ECB) havetaken a stand against the banking & finance industry's failure to promote gender diversity in its upper ranks.

Frank Elderson, an ECB Executive Board member and Elizabeth McCaul, an ECB's Supervisory Board member, have expressed their disappointment with the current state of affairs in a blog post on Tuesday, as per a Bloomberg report.

While acknowledging thatsome progress has been made in promoting gender diversity, they believed that targets set by banks have remained insufficient.Describing banking as "still a man's world", Elderson and McCaul have called for more ambitious but credible gender diversity targets.

The ECB has integrated gender diversity into its guide for fit and proper assessments since 2021, ensuring that the right senior managers assume leadership roles within banks. However, of the 361 chief executives named at significant institutions and their subsidiaries between 2020 and 2022, over 300 were men.

While the average diversity targets for management bodies rose from 32 percent in 2020 to 34 percent by the end of last year, the ECB has revealedthat approximately one-third of significant institutions did not meet their own targets. This lack of progress has led Elderson and McCaul to doubt the achievability of these targets in the near future.

Moreover, the ECB duo hasemphasisedthe need for countries to adopt theEuropean Union's forthcoming Women on Boards Directive. According to this directive, boards will only be considered balanced when at least 40 percentof the members are female.

Elderson and McCaul have also affirmed their commitment to utilising the existing supervisory tools available within national legislation to insist on improvements and address any internal governance shortcomings related to gender diversity within banks.

In a related study, theInternational Monetary Fund (IMF) has criticised central banks, including the ECB, for their inadequate progress in achieving gender diversity. According to the IMF survey, central banks, on average, filled less than half of their positions with women. Furthermore, the study revealed that the hired women were often relegated to lower-paid administrative roles or human relations.

Goldman Sachs settles gender discriminationsuit

In a groundbreaking move, Goldman Sachshas agreed to pay a staggering $215 million to resolve a long-standing class-action lawsuit accusing the Wall Street powerhouse of systematic underpayment of women.

Reuters reported that the New York-based bank has settled the matter with lawyers, who representapproximately 2,800 female associates and vice presidents, marking a significant step towards addressing gender inequality in the financial sector.

The imminent trial, scheduled to commence in June in New York, would have offered a rare public platform for examining the pervasive issue of inequality within the industry. It is worth noting that, except for one, all of the six largest USbanks have historically been led by men. Recognising the potential impact of this high-profile trial, the two parties hurriedly worked to settle before the proceedings began.

Notably, the settlement amount exceeds the sum paid by Smith Barney several decades ago to resolve the infamous "Boom-Boom Room" suit, which had accused the firm of harassment and discrimination.