if there was greater gender diversity in the Irish banking sector, would Ireland have weathered financial storms any better than it did?
IMF Chief Christine Legarde once posed the question ‘if Lehman brothers had been Lehman brothers and sisters, would we have had the level of financial crisis that we did?’.
A new documentary, produced by Angie Mezzetti, and broadcasting on Newstalk on Saturday 5th November 2016 at 7am, Repeated at 10pm: Banking On Women, explores this possibility. It also asks what can Ireland learn from international research and changing practices to ensure the banking sector will survive into the future. The opinion and experience of various expert contributors is looked at here in Ireland and in the UK. Also in the documentary the particular experience in Norway is examined where they weathered the recent financial crisis better than most countries.
According to Ed Sibley Director Credit Institutions Central Bank of Ireland, “experts such as Christine Lagarde, head of the IMF, have stated that the lack of gender diversity was a contributing factor to the recent financial crisis.” Sibley believes that “it is certainly the case that from a diversity perspective, senior management in the banks operating in Ireland are not representative of the demographics of the country.” He says in the programme that “considering the factors that impact on long term sustainability of business models and banks is important, and there is evidence that diversity has a role to play or is a significant factor.”
‘Sustainability’ is the key word that surfaces over and over again about the Irish banking system in interviews from contributors about the aspect of gender and the banking and financial sector. Without more diversity -particularly gender diversity- at senior ranks and at board level in Irish banks, in the long term the banks are not sustainable according to much of the international research.
Dr. Mary Murphy of NUIM Maynooth says there was an opportunity missed in the banking inquiry because there was no examination of the impact of gender on the Irish financial crisis. “If you don’t look for gender in the story, you are not going to see the full story and if you don’t see the full story then you are not going to learn the full range of lessons that might be learnt.”
The documentary looks back to see what the Oireachtas Banking Inquiry can tell us about the role of gender in the Irish financial crisis. Susan O’Keeffe former Labour Party Senator was the only woman on the Oireachtas Inquiry into the Banking Sector and she recalls rarely seeing a woman coming into the inquiry. “I think there were a lot of men who knew each other, who were friends with each other, who looked after each other, who brought people into boards that they knew from other businesses, or from playing rugby or football, and they were a large club all of their own, maybe they didn’t realise it but that’s what they did do. They all looked remarkably similar, they all sounded remarkably similar and there were hardly any women,” she says.
Corporate Governance expert Professor Blanaid Clarke, McCann Fitzgerald Chair in Corporate LawTrinity College Dublin and Central Bank Commission Board member says a challenging independent board is necessary for good corporate governance “by definition if you bring more women onto boards you have more independence on boards and that is hugely important.”
Group think is a risk factor all banks want to avoid according to Carol Andrews, Global Head of Prime Custody and Client Services with BNYMellon and 30% Club Steering Committee Member. She says “if you are dealing with a group that is 100% one way or 100% the other it doesn’t bring a balance in a discussion so ‘group think’ can often happen when you have a group of similar people together. I think it’s more about balance rather than women bringing something different. If you have gender balance across the board you can achieve parity and achieve real discussion and avoid that risk.”
Mark McLane, Barclays Bank Global Head Of Diversity and Inclusion in London says men and women save and invest differently over their lifetime and that it is important for banks to pay attention to and serve these clients needs differently. He also says that their diversity initiatives are also driving innovation. “We launched an investment vehicle in New York that tracks companies who are traded on the NYSE that have 25% or more of their board who are women and/or have a female CEO, they are outpacing the market. We have taken the business case around women and have produced an investment vehicle by which our corporate investors can now invest in that group of companies.”
Banking On Women also looks at the experience of Norway where they ‘do not believe in light touch regulation’ and where they have in place a gender quota of 40% of either gender as a requirement for the boards of all publicly quoted companies and this is having an impact on corporate culture as well as good corporate governance.
Karen Helene Ulltveit-Moe is Professor of Economics at Oslo University and a member of the Executive Board of Norges Bank -the Central Bank in Norway- and she says Norway has learned from its own banking crisis in the 90s and that they do not believe in light touch regulation. “What characterised the financial crisis was that before it happened there were groups of people who reaped huge benefits, and as it hit, they did not have to suffer big losses because the losses were suffered by the taxpayers in many countries. So in order to avoid that we need alignment of interests, we need schemes that are robust and make sure that people do not set out on this route of making too risky investments.” Having gender quotas does something to companies’ culture she believes.
Professor of Corporate Law Beate Christine Sjafjellat Oslo University is a specialist in corporate governance. She says that the 40% of either gender quota was not seen as a gender issue but rather as necessary to improve the corporate governance in Norwegian public companies. Compliance was 100% because companies knew they would be dissolved if they did not comply. It was treated as company law proper to improve the way that companies are run.
“It was informed by the idea that if we have boards that are basically only made up of people from half the population then you are probably missing out on some talent.” She says that in Norway as in most countries it wasn’t like board members were selected from half of the male population but rather it was from a very specific geographic area. “Although I am being a little unfair there, you could say middle aged white men from Oslo West were replaced by women through this rule.”
They have only had a rule for a few years, Prof Sjafjell says, but it has become accepted by business and as normal as returning annual report and tax returns. “It illustrates that the domination of one gender in this case male and the path dependent way of selecting board members can be so strong that you actually need hard law to break that.”
The performance of some of Ireland’s main banks is looked at with regard to gender diversity at board and senior management level as well as initiatives being undertaken by some of them. Among the other contributors are Orlagh Hunt former Chief People Officer with AIB now Transformation and Leadership consultant who talks about initiatives in the UK and Ireland; also Carol Bolger Independent Director and former Banker who has conducted research into women’s perceptions and attitudes to banks particularly with regard to entrepreneurship.
BROADCAST DETAILS: Banking On Women is part of the Winter Season of Documentary On Newstalk. The documentary will be broadcast on Newstalk 106-108FM on Saturday 5th November 2016 at 7am and again at 10pm.
Banking On Women can also be listened to online at: www.newstalk.com
Podcast available at: www.newstalk.com/documentaryonnewstalk after the broadcast.
CREDITS: Banking On Women was produced, presented and edited by Angie Mezzetti. Editing and final mix by Sean Byrne Tinpot Productions.
Banking On Women was funded by the Broadcasting Authority of Ireland, with the Television License Fee
Original Music ‘All Art is Vandalism’ by Christine O Donnell
Angie Mezzetti is a journalist and radio and TV documentary producer. She is a former Newscaster with RTE News and now runs Ocarina Productions.