The European Banking Authority has announced it wants supervisors across the EU to crack down on banks and investment firms who flout rules on promoting diversity. The EBA, which writes the rule book enforced by the European Central Bank and national supervisors, said that 27% of almost 800 European banks and investment firms it reviewed had still not created the diversity policies that became a legal requirement almost a decade ago.

The EBA’s report also charted the painfully slow progress of banks and investment firms in improving the diversity of their top management teams and supervisory boards, which remain almost 75% male and continue to pay men more than women for their services. The report comes almost a decade after the EU created legal requirements mandating banks and other financial services companies to address the largely white, male, and middle-aged profile of their boardrooms and executive committees in the wake of the financial crisis. The rules included a demand that all companies set a diversity policy for their management boards, and that larger firms set targets for improving the diversity of their leadership teams.

Reaching the goals Adoption of the policies was better among larger institutions, where compliance was 94% among a group mainly composed of large banks. But the EBA criticised that group’s approach to setting mandatory targets, with nearly 40% found to have set ‘very low’ goals, including some that aspired to less than 25% female representation on boards. The EBA wants them to use supervisory powers to force banks and investment firms to comply with rules.

Those options could include higher capital requirements and restrictions on business. The EBA claims enforcing the standards would not only make firms fairer but also safer by combating groupthink. Banking supervisors have already made complying with diversity rules one of the elements of their annual supervisory reviews.

If a bank is found to repeatedly breach its diversity obligations, ‘then the measures taken by supervisors will get harder’. Gender equality The EBA also wants supervisors to examine whether companies’ pay policies are ‘gender neutral’. The EBA review found that female executive directors earned an average of 9.

5% less than male peers, even excluding the pay of CEOs. Female non-executive directors earned almost 6% less. Overall, the EBA found that women accounted for 18% of banks and investment companies’ executive directors, up from 15% three years earlier, when the data also included the UK.

Women’s representation on supervisory boards rose from 22% to 26% over the 2018-21 period, while the percentage of female chief executives rose from 8% to 11%. .