EBA report shows lack of diversity policies at European banks

The European Banking Authority (EBA) issued a benchmarking analysis of diversity practices at EU level showing that only a limited number of institutions have already adopted a diversity policy. In particular, the report highlights that the actual level of diversity in the composition of the management body in institutions differs significantly between Member States, namely regarding the gender diversity. The Authority calls on institutions and Member States to consider additional measures for promoting a more balanced representation of both genders. The report is based on data from 873 institutions from 29 EU and EEA Member States, and covers credit institutions of different sizes as well as investment firms.

The EBA report on the benchmarking of diversity practices showed that the representation of women within the management body is still very low, with 13.6% in the management function and 18.9% in the supervisory function.

According to EU legislation, all institutions are required to adopt a policy promoting diversity within their management bodies, as a way to improve decisions on strategies and risks, and mainstream a broader range of views, experience, values and background. Significant institutions are also required to set a target for the representation of the underrepresented gender in the management body and to take measures to increase their number in the management body to meet that target.

In spite of the requirements introduced by the Capital Requirements Directive (CRD IV), only a limited number of institutions (35.5%) have already adopted a diversity policy and only around two thirds of them have already one that promotes gender diversity. And also in these cases, diversity policies differ significantly between Member States.

While gender is a key aspect of diversity, the same holds true for age, educational and professional background and the geographical provenance. The EBA report found diversity of age only to be of concern for a limited number of institutions, while the geographical provenance was an issue only for some large international banks. Finally, diversity with regard to education and professional background is linked to the management bodies collective fit and properness, and was found to be well developed in many institutions.

The EBA will continue to monitor the development of diversity in management bodies and issue periodical benchmarking reports. The EBA is also developing guidelines on the notion of diversity as required under Article 91(12) of the CRDIV.

The EBA statement and related documents are available here.

Lavanya Rathnam

Lavanya Rathnam is an experienced technology, finance, and compliance writer. She combines her keen understanding of regulatory frameworks and industry best practices with exemplary writing skills to communicate complex concepts of Governance, Risk, and Compliance (GRC) in clear and accessible language. Lavanya specializes in creating informative and engaging content that educates and empowers readers to make informed decisions. She also works with different companies in the Web 3.0, blockchain, fintech, and EV industries to assess their products’ compliance with evolving regulations and standards.

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