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Large gender pay disparities persist within the U.K. operations of Wall Street’s biggest banks.
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Thursday is the deadline for companies with at least 250 U.K. employees to report gender pay gap information to the British government; U.S. investment banks with a presence in the U.K. are required to do so as well. Studies have shown that measuring and publishing diversity metrics drives improvement — and that more diverse companies perform better — and the U.K. data provides a rare insight into the usually opaque pay practices of America’s corporate giants.
Of the big four Wall Street banks, Bank of America Merrill Lynch and Wells Fargo were the only two to report improvements in both the median hourly and median bonus pay gaps in 2018.
Bank of America Merrill Lynch reported a median hourly pay gap of 29.2 percent and a median bonus pay gap of 55.1 percent, down from 30.5 percent and 56.4 percent, respectively, in 2017. Wells Fargo reported a median hourly pay gap of 21 percent and a median bonus pay gap of 44 percent, down from 24 percent and 61 percent, respectively.
Most banks continue to say the issue is under-representation of women in senior roles as opposed to lower pay for women for equal roles. The key is to get more senior women into the investment banking, wealth management and financial advising businesses, Bank of America CEO Brian Moynihan told CNBC’s “Closing Bell” anchor Wilfred Frost.
“Drive the representation in the places you need it,” said Moynihan.
Activist investors and advocacy groups are pressing Wall Street banks to reveal the global median pay gap data, something Citigroup has already done, though a series of shareholder proposals to hit the ballot box at company meetings in 2019.
Moynihan warned against an over-emphasis on median pay gap data, which doesn’t take into account gender-based career preferences. These numbers may slide in the wrong direction as banks hire more junior women to improve the pipeline of female employees, say banking insiders.
In the U.K., Citigroup reported an hourly median pay gap of 32 percent (up from 30.1 percent in 2017) and bonus median pay gap of 71.4 percent (up from 67.7 percent in 2017). JP Morgan’s median hourly gap narrowed from 26 percent in 2017 to 25.7 percent in 2018, while its median bonus gender gap widened from 41 percent in 2017 to 41.2 percent in 2018. Goldman Sachs’ two U.K. banking entities held fairly steady across all metrics except the median bonus pay gap at Goldman Sachs UK SVC, which widened from 30.5 percent in 2017 to 35.8 percent in 2018.
There is much work to be done to improve gender diversity in finance on a global scale. Among America’s biggest 100 banks there are just three female CEOs: KeyCorp CEO Beth Mooney, Synchrony Financial CEO Margaret Keane and CIT Group CEO Ellen Alemany, according to research from S&P Global Market Intelligence.
The banks have introduced a number of measures to try to improve gender and ethnic diversity, tying manager pay and promotions to hitting targets, and involving both male and female employees in the process, through training and networking events.
It starts with education and efforts to get girls interested in STEM subjects. For example, Morgan Stanley‘s Girls Who Code summer program introduces high school students to engineering and computer science. Bank of America is partnering with Columbia Business School to offer a 10-month program for high potential talent including in-person personal development sessions and executive sponsorship. In an memo to employees, Goldman Sachs CEO David Solomon announced the firm will aim to hire at least 50 percent female candidates for analyst and entry-level positions.
At all the big banks, there is greater emphasis than ever before on retaining those women, and this is where banks are rolling out the greatest number of new initiatives, including things like mentoring programs, networking events, training and mandates that a diverse slate of candidates is considered for promotions.
In his annual letter to shareholders on Thursday, JP Morgan CEO Jamie Dimon emphasized the fact that women represent 30 percent of the firm’s senior leadership globally — four women who run businesses and functions which on their own would be among Fortune 1000 companies.
“Investing in the advancement of women is a key focus for our company, and we have established a global firmwide initiative called Women on the Move that empowers female employees, clients and consumers to build their career, grow their businesses and improve their financial health,” wrote Dimon.
At Morgan Stanley the heads of HR and Diversity and Inclusion meet with managers to identify women and other minorities for Managing Director and other leadership roles. Those candidates are offered tailored career development plans and management experience opportunities to position them for leadership. Mentorship is also offered, connecting individuals with sponsors to advise and advocate for them.
In his memo, Solomon made clear to managers at Goldman that they will be held accountable for improving diversity metrics and required to consider a diverse set of candidates for MD positions.
“The extent of their efforts will become an important part of what is considered as we pay and promote managers,” wrote Solomon.
Of course, promotion is just one piece of the puzzle. The gender-pay gap really expands when women have children, and parental support is seen as key to retaining more women on Wall Street. In addition to maternity and paternity leave, many of the big banks have introduced coaching and support groups for new parents. For women returning to the workforce after having a child, there are support sessions, family lounge facilities and emergency back-up childcare options available.
Just how impactful these programs will be when it comes to improving gender diversity will take years to recognize, but a new focus on gender and ethnic diversity at America’s biggest corporations is pushing leadership towards greater transparency.
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