Crash makes it harder to attract women into bank boardrooms

Lack of female directors in finance firms threatens knock-on 'bad effect throughout UK business'

The financial crash has made it harder to attract women directors to join the boardrooms of banks, according to new research from Egon Zehnder, one of the world's leading search firms.

Andrew Roscoe, Egon's UK managing director, said that the tougher scrutiny on banks and other financial institutions by the regulators following the crash is leading to fewer women joining boards because they have been put off taking up non-executive positions: "It seems that the stricter rules and greater scrutiny of directors is a real deterrent, which is a great pity because if there was ever a time that banks needed diversity it is now."

According to Egon's research, the number of women holding board positions in financial services in Britain was 13.4 per cent in 2008, but has dropped to 11.1 per cent this year. Even allowing for the number of female directors lost in the demise of HBOS, the level of women merely stayed the same over the three-year period. This is surprising considering the drive by most companies to boost their numbers. Mr Roscoe added that he believes the lower number of women being recruited to financial services – which is by far the biggest sector of British industry, with board positions representing over 20 per cent of the total – will have a knock-on effect in industry because of the sheer size of banking. "As the financial services sector is so big, it acts as a breeding ground for many women directors who then go on to the boards of other companies. So if the number of women coming through is falling, this will have a bad effect throughout UK business," he says.

According to Egon's research, which covers 340 firms and 4,875 board positions across 17 European countries, the number of women on British boards falls way short of their EU contemporaries, particularly Scandinavia. In Norway, where the government has ordered firms to fill 40 per cent of board positions with women, the number is as high as 38.5 per cent. But in Sweden, Denmark and Finland, where the working environment is far more conducive to women in senior positions than in the UK, there are also far higher proportions – up to 32 per cent in Sweden – achieved without legislation.

Of the 761 directors of banks across Europe, only 107 are women, or 14.1 per cent, which is higher than over the past two years but below the number in sectors such as clothing, leisure, media and tobacco, where women make up 20 per cent of board positions.

However, Viviane Reding, the EU Justice Commissioner, has said that unless boards move fast, she will use new powers under the Lisbon Treaty to impose "gender quotas", which could reach 20 per cent. In Britain, the Financial Reporting Council's Combined Code recommends that firms increase the number of women on their boards, a move that Mr Roscoe hopes will boost the number of women directors, without positive discrimination.