Cen­tral Bank threatens gen­der quo­tas if banks fail to boost di­ver­sity

Irish Independent - Business Week - - Front Page - Gavin McLough­lin

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.

Cen­tral Bank deputy gov­er­nor Ed Si­b­ley said banks must act

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.