The gender pay gap in the financial services sector

The highest gender pay gaps are often found in financial and insurance activities, given the big gap in earnings between those at the top and those at the bottom, the fact women are more likely to be in junior rather than senior positions and the impact of bonuses.

The deadline for the second gender pay gap figures closed at midnight on 4th April. Of the 10,444 employers with over 250 employees who filed figures 478 were in the financial and insurance activities sector.

The financial services industry covers a raft of different types of business and within those businesses are very different types of jobs – and earnings.

Banking, for instance, includes everything from high street or retail banking to investment banking and asset management. Women tend to be more concentrated in retail banking, where jobs are more local and where earnings tend to be lower.

The jobs in investment banking and asset management which attract high bonuses tend to be taken by men.

Each area of banking has its own particular issues with regard to gender diversity. For some attracting women is a huge issue and this has a big impact on the pipeline to senior positions, but getting more women in at the junior level can increase gender pay gaps in the short term.

In others, there is not such a big problem with attracting women, but there is an issue with retention, particularly after childbirth, and with promotion into senior roles.

Partly this is a cultural and legacy problem – a male-dominated culture and underlying unconscious bias towards women makes it difficult for women to progress.

Older organisations also tend to be more hierarchical and more male-dominated and have a harder job to turn that around. There have been numerous high profile legal cases of women facing discrimination and being forced out.

Here are a selection of some of the headline figures*:

• HSBC Bank Plc has a mean 61% gender pay gap [up from 59% last year].
• While parts of the HSBC group have also seen increases on last year – HSBC Global Asset Management (UK) Ltd, for instance, has seen its gender pay gap rise from 40% to 44%, others have seen slight decreases, such as HSBC Group Management Services Ltd where the mean figure is down from 42% to 41%.
• The mean bonus gap for HSBC Bank Plc is down 1% from 86% to 85%, but up by 2% for HSBC Global Asset Management (UK) Ltd  and HSBC Private Bank (UK) Ltd – from 62 to 64% and by 49 to 51% respectively.
• While slightly more women got bonuses at HSBC Bank Plc in 2017 this was reversed for 2018.
• Some 33% of senior managers are women [compared to 34% last year], which is a higher rate than many banks.

HSBC also has a lot of women at the bottom level – they account for 70% of the lowest level employees [71% last year]. In the second highest quartile – the level just under senior management level – the number of men has risen from 36 to 38%.

• Barclays has an overall 40.2% gap [down 1.4% on last year] and a 73.7% mean bonus pay gap [down 2.7% on last year], although more women receive bonuses than men.
• Women make up 29% of senior managers and 68% of those in the lowest pay band.
• In the level below senior management they make up 47% of employees. This is broadly the same as last year and the bank says that any significant change will take time.

The figure for the mean gender pay gap for Barclays Bank Plc, part of the Barclays group, is 49.3% – up from 48% last year.

• In corporate investment banking, The Bank of America Merrill Lynch has a combined 28.3% mean gender pay gap.
• It says 18% of this is due to the gender representation at different seniority levels and a further 9% is due to the different roles that women and men perform at the company.
• It says representation of women at mid-level remained at 33%, but representation at senior level rose from 24% to 25%.
• The number of females in junior roles increased from 41% to 43%.

It says building a supportive culture and promoting greater work life balance combined with outreach work with, for instance, women in STEM and Inspiring the Future, a schools-based programme, show its commitment to promoting greater gender equality.

• In retail banking Metro Bank posts a 21% mean gender pay gap
• Co-op bank has a 29.9% gender pay gap [it says it has increased the number of women in senior roles from 32% in 2016 to 41% in 2018]
• TSB posted a 31.2% mean hourly pay gap, slightly up on last year.

Some banks have filed multiple figures for different entities and many have staff which are spread internationally, such as JP Morgan International.

Lloyds Bank plc has a 36.1% gap, down from 37.6% last year  [with 32.7% of top managers being women, compared to 31.5% last year], but Lloyds Bank Commercial posts a gap of 25.9% [down from 27.6% in 2017] and Lloyds Bank Asset Finance has a 23.2% gap, down 1% on last year.

Australian bank Macquarie, which provides banking, advisory, trading, asset management and retail financial services, has filed figures for three different employer entities, plus a combined UK gender pay gap figure of 47% [49% last year].

How companies are addressing the pay gap

Many employers have posted explanations for their pay gap, outlining how they are addressing the issue. Barclays, for instance, says part of the reason for its gender pay gap is that there are a lot of women in more junior roles in retail banking – roles which are both local and flexible – whereas it has been challenging to attract more women to more senior roles in investment banking.

It says it is keeping in step with methods promoted by the Government Equalities Office to promote greater gender equality, such as hiring from within and having senior-level sponsors of diversity networks, a good uptake of its Dynamic Working initiative, a returners programme, mentoring and sponsorship, targets, coaching and a gender network.

It says its approach is working, but slowly. For instance, the percentage of senior women leaders rose by 11%, compared to a fall in male senior leaders of 6%.

At mid management level the number of women has increased by 13%, compared to a 4% rise for men. Actions for the future include an accelerator programme for high potential employees, more research into female attrition and more work with external recruitment partners to ensure they share the objective of more women in senior leadership positions.

To address its gender pay gap, HSBC has signed up to the 30% Club campaign with an aspirational target for 30% of senior leadership roles to be filled by women by 2020.

It will also request gender diverse shortlists for all external senior leadership hires and talks about inclusive leadership and ‘a new inclusive Hiring Essentials programme’. In addition it provides mentoring and sponsorship for women,  says it ensures balanced representation in HSBC’s talent development programmes for high potential employees and works with external partners on women’s career progression.

Other provisions are parental leave coaching and a new Flex employee network to promote flexible working. It says it has improved pay transparency and consistency for junior employees.

Some employers in the financial services sector have for some time been aware of their gender diversity problem and have been looking at different ways to get more women into senior positions.

Returner programmes, for instance, originated in the sector. However, progress has often been very slow and, as the figures above show, some have gone backwards.

Employers say they recognise it will take a long time for significant change. Some think more radical action is needed.

Several employers in the financial services sector have featured in the Workingmums.co.uk Top Employer Awards and we have highlighted the different ways that they are attempting to drive greater gender diversity.

Key issues include agile working, leadership programmes, sponsorship, coaching, tackling bias, cultural change and promoting Shared Parental Leave.

Although many have returner programmes, these are usually small scale, although employers note it is more about changing attitudes to returners and to career breaks.

Lloyds Banking Group won Workingmums.co.uk’s Overall Top Employer Award in 2017. Read about how it is working towards greater gender diversity at all levels here.

Bank of America Merrill Lynch won Workingmums.co.uk’s Top Employer Award for Career Progression. Read what they are doing here.

M & G Investments won Workingmums.co.uk’s Top Employer Award for Family Support. Read what they are doing here.

UBS won Workingmums.co.uk Best for Returners Award in 2018. Read about it here.

*NB The mean gender pay gap is a measure of the difference between women’s mean – average – hourly wage and men’s mean hourly wage. The gender pay gap includes a figure for mean hourly pay and for median hourly pay. The median gender pay gap is the difference between women’s median hourly wage (the middle paid woman) and men’s median hourly wage (the middle paid man).

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