Central Bank threatens gender quotas if banks fail to boost diversity

Central Bank deputy governor Ed Sibley said banks must act
Central Bank deputy governor Ed Sibley said banks must act

The Central Bank will consider putting quotas in place if there isn’t more diversity at the top of Irish banks.

Central Bank deputy governor Ed Sibley said low levels of diversity increase the risk of “over-confidence in decision-making, a lack of internal challenge and an excessive resistance to external challenges, and resistance to change”.

Speaking to the ECB newsletter, he said his preference was that banks would increase diversity themselves. “However, if diversity does not improve at senior levels, the central bank will have to consider whether further specific requirements should be introduced,” he said.

Mr Sibley said the Central Bank had been carrying out a “deeper dive” on the levels of diversity at Irish banks this year.

He said that “by most measures” there is a lack of diversity at senior level in Irish banks.

“The modicum of progress that has been made at supervisory board level is not reflected at the executive/management level. Gender imbalances at senior levels are even more acute in those roles that generate revenue and drive the business – such as chief executive officer, chief financial officer, heads of retail, and so on. Over the last six years 94pc of appointments into these roles have been awarded to men, typically men with similar backgrounds and experiences.”

Among the relatively few women in the top tier of Irish banking is Francesca McDonagh, CEO at Bank of Ireland, while Ulster Bank is set to appoint Jane Howard to lead it here. Mr Sibley said his objective was to encourage diversity of thought and perspective, not just a proportional representation of various demographic groups. The Central Bank expects that banks’ boards and management should put in place diversity and inclusion policies that are subject to annual review and discussion, Mr Sibley said.

Asked about the financial performance of the sector, Mr Sibley said Irish banks were emerging from the crisis with more sustainable profitability.

“Balance sheets are stronger, funding profiles more resilient and there have been significant improvements in many other areas – including very significant reductions in non-performing loans. But there is still work to be done … I have said previously that the Irish banking sector must ensure that the holes in the roof from the last storm are mended long before another set of storm clouds appears on the horizon.

“This is particularly important in Ireland, given the openness of the economy and its strongly cyclical nature. These factors have contributed to our decision to raise the countercyclical capital buffer in Ireland to 1pc, to further enhance the resilience in the system.”

Mr Sibley said banks should be investing in technology in order to meet changing customer wants and guard against cyberattacks. He said group-think in the financial, political and regulatory systems had contributed to the depth of the crisis here, adding that this was one reason why the Central Bank wants to emphasise diversity of thought.

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