The Central Bank has criticised the country's banks for lacking ambition in pursuing an agenda to improve diversity, with most limiting themselves to a "one-dimensional" focus on gender.
The regulator carried out an assessment of diversity and inclusion across the five remaining retail banks in the Irish market in recent months, alongside its well-flagged behaviour and culture review, published on Tuesday.
The diversity examination found that while banks had taken more steps in the past two years to improve diversity, “there are significant differences in the maturity and ambition” among the banks, with two companies “clearly further ahead in prioritising” the issue.
“Groupthink has been identified as a contributing factor to the financial crisis,” the Central Bank report said. “The Central Bank’s own experience is that a lack of diversity and inclusion at senior management and board level in organisations is a leading indicator of elevated behaviour and culture risks.”
The report found that men made up 80 per cent of candidates that the banks put forward between 2012 and 2016 for regulatory approval for senior roles, though that fell to 71 per cent last year.
Ambitious targets
Bank of Ireland has set out the most ambitious gender-equality targets in the sector, committing in April to following a 50:50 ratio in all new management and leadership appointments by the end of 2021, compared with just 36 per cent currently.
AIB said in its latest annual report that it had met an internal target of 25 per cent of its leadership team being made up of women, while 38.7 per cent of its managers were women as of last December, against a target of reaching 40 per cent by the end of 2018. Permanent TSB said in its 2017 annual report that women made up just 24 per cent of its senior managers.
The Central Bank report also revealed that 68 per cent of candidates the banks put forward between 2012 and 2016 were Irish nationals, while a further 21 per cent were for British natives.
The Central Bank said it would be engaging with the banks to ensure their boards and management teams had approved and were implementing clear diversity plans, which would be “subject to annual review, with effectiveness measured against suitably ambitious outcomes and targets”.
The regulator said it would “consider whether it is necessary to put further specific requirements in place” in the absence of improvements in diversity and inclusion at senior levels of financial firms.
