EU introduces surprise boardroom quotas for banks

Under new rules banks will have to decide on a target for the 'underrepresented gender' on their boards.

by Emma Haslett
Last Updated: 14 Aug 2013
Being a bank is tough these days. Not only do they have to negotiate increasingly tough capital requirements from our friends in Brussels, but they have the Bank of England’s ‘capital Taliban’ to contend with as well.

Now it looks as though they will have rules of a different kind to wrangle with: boardroom quotas, quietly sneaked into new legislation from the EU.

The rules have been spotted by the Prudential Regulation Authority and the Financial Conduct Authority, who published consultation documents on the EU’s latest capital requirements directive.

The requirements include a line saying ‘large financial firms’ must form a nomination committee to select the board of directors and ‘decide on a target for the representation of the underrepresented gender on the management body and how to meet it’. MT won’t succumb to the temptation to point out that in some financial firms, men are seen as the ‘underrepresented gender’ if there’s so much as a single female PA in the company…

Is this a precursor to quotas being introduced across the board(s)? Not yet: the government’s last inquiry into the subject, which took the form of a report by Lord Davies published in 2011, recommended that if 25% of FTSE 100 boardroom positions aren’t made up by women by 2015, the government should look at the idea of quotas again. That was about as threatening as it got, though, so businesses are off the hook for now.

Still: perhaps it’s time. A survey by the Royal Economic Society Women’s Committee has found the number of female economics undergraduates has risen by just 10% over the past 10 years – compared with a rise of 26% in male undergrads.

Bearing in mind that just 12% of new directors appointed on FTSE 100 boards in 2012 were female – and that a grand total of zero people on the Bank of England’s rate-setting MPC are women – perhaps this is an indication that when choosing a degree, the ‘underrepresented gender’ don’t see many opportunities for themselves in the City…

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