In addition to the column last week on the subject of gender equality — it keeps being stressed how blatantly the issue of the pay gap between men and women is ignored. The matter particularly glares in the banking sector. More than two-thirds of female investment bankers believe they are not paid as much as their male peers for doing the same job — casting doubt on executives’ regular insistence that the sector’s yawning gender pay gap is largely due to a lack of women in senior roles.
Investment banks are under pressure to bolster the number of women in their senior ranks, but a survey of 430 female professionals by Emolument, the pay benchmarking website, and Wessex Partners, the executive search firm, shows women receive less than their male colleagues in the same role. Sixty-six per cent of respondents working in investment banking said they earn less than their male colleagues in the same position.
Chair of The 30% Club, the diversity campaign group, Brenda Trenowden, said unequal pay in investment banking often comes down to bonuses. “Male managers often give the best, most lucrative clients to other men, which results in bigger bonuses,” she said.
“Banks may feel that they are justifiably paying these male employees more, but there was bias in the client allocation.” She added: “We also find that when women go off on maternity leave — often for very short period of times — their clients have been given away, and they don’t get them back.”
Financial services organisations in the financial district of London have revealed large pay gaps between men and women, despite many of them signing up to the UK Treasury’s Women in Finance Charter, which was launched in 2016. Many have pinned this on a lack of women in management roles, rather than unfair pay practices. Women comprise just 25 per cent of senior positions in investment banking, according to a Treasury-commissioned report by think-tank New Financial.
However, Emolument’s figures show there is work to be done in closing the gender pay gap. This is at odds with public statements from large banks, which claim to pay men and women equally for the same position. In its 2018 gender pay gap report, Barclays said it was “confident that men and women at Barclays are paid the same for doing the same job.”
In a memo to staff announcing its 2018-19 gender pay gap report, Goldman Sachs International chief executive Richard Gnodde said: “While I am confident in the fairness of our compensation system, there is much more that we need to do to ensure that we have a diversity of talent at all levels at our firm.”
Women at Goldman Sachs International were paid 35.5 per cent less than men on a median basis last year and earned a bonus that was 68.9 per cent lower than the median man’s. At JP Morgan, the median pay gap was 25.7 per cent, with bonuses 41.2 per cent lower.
Banks have focused on promoting more women into senior ranks. JP Morgan named a record number of female managing directors in its annual promotion round this year, while Goldman Sachs unveiled a programme in March aimed at ensuring at least 50 per cent of its recruits were women.
Goldman said it would look at the “extent of their efforts” on ensuring the success of the new scheme when calculating annual bonus payments for managers, as well as their attempts to promote more women into managing director positions.
It is interesting to note that the delay to the UK’s departure from the European Union has done nothing to slow investment banks’ plans for a no-deal Brexit on October 31, the chair of the sector’s lobby group has said.
“For many of our members, Brexit has already happened,” Michael Cole-Fontayn, independent chair of the Association of Financial Markets in Europe, told attendees at the FT-Fitch Global Banking Conference in London.
“Capital has been allocated, liquidity has been allocated, technology budgets have been allocated. The one thing that has not been allocated to a great extent yet is movement of people,” he said. Financial services companies are likely to shift 7,000 jobs out of the ‘City’ (financial district of London) as a result of Brexit, the consultancy EY estimated in March, with around £1tn of assets expected to transfer to the bloc.
(The author is our foreign correspondent based in the UK. He can be reached at andyjalil@aol.com)
andyjalil@aol.com
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