The recent proposals by Michel Barnier, the European commissioner for internal markets, to impose a quota requiring Europe’s banks to have one-third women on their boards should come as no surprise.
Anyone following the commissioner’s statements will know he is an outspoken fan of mandatory measures to accelerate the diversity of all publicly traded companies. In January, he told Süddeutsche Zeitung, the German newspaper:
“I am open to the idea of introducing Europe-wide quotas for women – for example, in the boardrooms of publicly traded companies.”
He is an advocate of board diversity as an essential component of corporate governance, providing a counterbalance to short-termism and group-think specifically in the banking sector. In April, for example, he was quoted in the Financial Times as saying:
“Too much short-term thinking has had disastrous consequences. Above all, we need company boards to be more effective and shareholders to fully assume their responsibilities.”
Interviewed in February by The Wall Street Journal, he said:
“If certain bankers have short memories – if their choice is to say, ‘Growth is returning, the crisis is over, business as usual’ – they are not going to be very welcome here … We are watching how the European legislation is being applied, and we are going to do an evaluation in several months to see if we have to go further.”
Now, several months down the line, we might assume the commissioner is underwhelmed by the progress made by European banks.
As the Guardian points out, not one of the UK’s “big five” banks would comply with the regulation as set down in the draft proposal. The boards of both the bailed-out Royal Bank of Scotland and Lloyds Banking Group currently have less than 10 per cent women. Of 12 directors, Lloyds has just one female non-executive director (Anita Frew), and on RBS’s board of 11, there is also only one woman (Penny Hughes). HSBC leads the UK banking diversity table with 25 per cent, followed by Barclays (15 per cent) and Standard Chartered (13 per cent).
The proposals form a small part of the 130-page European Commission capital requirements directive (CRD 4), and responses are invited by July. While Barnier’s push for mandatory board quotas will have some support in Brussels, history suggests opponents will succeed in ensuring the final directive does not go this far.