Experts acknowledge that institutions have taken important steps to improve board diversity, but there is still much to do. And they suggest that the current gender quota law should be more comprehensive. Debate of the fifth edition of the Money Conference, with the presence of Miguel Maya, CEO of Millenium BCP, Paulo Macedo, CEO of CGD, António Ramalho, CEO of Novo Banco, Francisco Bandeira, member of the executive committee of BPI and António Ramalho, executive chairman of Novo Banco, moderated by Rosália Amorim, director of DN © Paulo Alexandrino/Global Imagens Comment Portugal is the European country with the fewest women on the board of banks, according to an analysis by DBRS Morningstar. The national banking sector has only 23% of board seats occupied by female managers, a figure below the European average of 37%. A situation that has been improving, but there is still a long way to go, as explained to Dinheiro Vivo experts in corporate governance. The low rate of gender parity in the top positions of the financial sector is a problem across several European countries. As Maria João Guedes explained, "banking is a sector that is subject to numerous rules and regulations. One of the ones I highlight is the fit and proper evaluation that values previous experience to perform the job. Well, in the past women took less top positions in banking and therefore have less experience in such matters", pointed out the ISEG professor. However, the Corporate Governance and Corporate Finance professor pointed out that "there are many competent women, it's just a matter of making a wider selection and looking for the right person for the appointment". Looking at the actual figures for Portugal, relative to 2021, Charlotte Cervin highlights that in recent years "Portuguese banks have improved gender representation, since in 2014 women made up less than 10% of board members," the senior analyst for European Financial Institutions at DBRS Morningstar told Dinheiro Vivo. A trend that has been registered in the Old Continent, largely due to the quota laws that many countries have adopted. Currently, the European average of female managers on boards is 37%, an improvement from the 35% achieved in 2020 and 32% in 2019, and a significant jump compared to 22% in 2014. The Nordic countries are at the top of the ranking, notably the Danish banks which have 55% women on boards and the Norwegian 50%. The tail of the list, besides Portugal, is occupied by Germany, with 29%. Shy steps The low gender diversity rate is even higher when it comes to executive positions. A number worsened taking into account the CEO positions. Of the 43 banks analyzed by DBRS, only five of the CEO positions are female. These positions are held by Norway's DNB, Sweden's Handelsbanken, Britain's NatWest and Nationwide, and Bank of Ireland. But in this field, and despite not having any women in the position of CEO of a bank, Portugal is not in the last places. "Executive leadership positions in Portugal are approaching the European average in 2021 with 23% of executive leadership positions held by women, slightly below the average of 26%," detailed Charlotte Cervin. According to the DBRS senior analyst, the increase in female representation at all levels of management is the result of the policies that Portuguese banks have undertaken, following point 5 of the UN Sustainable Development Goals which aims to improve gender equality. "This has led financial institutions such as Banco Montepio to increase representation on the Board from around 15% in fiscal 2020 to 58% after the appointment of the new Board of Directors in July 2022, and parity at the executive team level," pointed out the head of DBRS who for the analysis in question took into account data from BCP, CGD and Novo Banco. In general, evaluating the Portuguese banking universe as a whole, Charlotte Cervin points out that the improvements observed in diversity "were not only in terms of gender, with Portuguese banks also focusing on increasing diversity in terms of professional experience, international experience, age and skills". For his part, Nuno Farinha adds that the evolution that has been seen, "with slower progress in Portugal", was driven by the implementation in 2017 of the law that imposes gender quotas. As explained by the professor of the University of Porto, the national legislation requires listed companies and the state business sector, under penalty of fines, to maintain a minimum ratio (33.3%) of female participation on boards. The problem? "The small and decreasing number of listed companies in Portugal does not allow for a very comprehensive scope of this measure, and there is currently only one bank listed on the Portuguese stock exchange," he added, referring to the BCP. In the case of the Portuguese state, the corporate governance specialist points out that "the small number of financial institutions it controls also does not have a very decisive influence on the behavior of the generality of the national financial sector". However, he points out that "CGD is, among the main banks operating in Portugal, the one that claims the highest percentage of women (over 60%) in relation to total employees". But even so, "it currently has a still relatively low ratio of women on the Board of Directors (6 out of 17, or 351 PT3T, well below the 601 PT3T indicated above) and has never had a female CEO", he recalled. Only this year, with the appointment of Maria João Carioca, did the public bank have a female financial director for the first time. In fact, as some of the specialists recalled, to exemplify that the evolution of national banking in this theme is recent, only in 2012 the BCP, a bank that was born shrouded in controversy of not hiring women, had the first female executive director in its history. In other words, the path has been taken in recent years, but much more needs to be done, warned Duarte Pitta Ferraz. In order to change the current situation, the Nova SBE Governance and Banking professor suggests that the current national law should be more comprehensive, as it is in Europe. "The step of creating this legislation was good, but it's time to review the law," he argues. A line of thought also followed by Nuno Farinha who takes the opportunity to underline that the European Parliament approved last November the adoption of rules in the European Union for the minimum percentage of women on boards to be raised to 40% in listed companies as of 2026. "But only with a more significant and rapid development of the Portuguese capital market (currently quite unlikely) could there be a direct impact of the existing legislation," he laments. All the experts highlighted the advantages that diversity, not only of gender, but of age, background and nationalities, can bring to companies. And one of the conclusions of the DBRS analysis is precisely that gender diversity is greater in banks with higher ratings. "Certain studies point to a minimum percentage of 30% female that would allow a positive impact on company performance," revealed Nuno Farinha. But he warns that "this increase cannot occur to the detriment of a merit logic whose presence will be essential to ensure a good business performance and even to the reputation and acceptance of gender equality plans and measures", he added, also stressing that the reduced participation of the female gender in national boards "is not something exclusive, nor especially more notorious, in banking". According to a study conducted before the quota law came into effect, the percentage of women on the boards of listed companies in Portugal was around 11%, and most of the sectors in question were non-financial. Going back to the specific case of banking, Maria João Guedes explains that financial institutions "that have more women on their boards benefit from a greater diversity of ideas, talents, backgrounds, among others, and this is valued by investors. In this sense, the ISEG professor points out that "a good management practice is to appoint the right women to the right positions and not just for symbolic reasons", because "we still notice that women are mostly appointed to non-executive positions and continue to be more distanced from effective power". In other words, "banks cannot afford not to appoint women, at the risk of destroying value and damaging shareholders," he warned. And recalled the famous quote from Christine Lagarde, in 2018 when she was director general of the IMF, about the male predominance in the world of banking and the collapse of Lehmon Brothers: "If it were Lehman Sisters, the world would be very different today". [Additional Text]: Debate of the fifth edition of the Money Conference, with the presence of Miguel Maya, CEO of Millenium BCP, Paulo Sara Ribeiro Sara Ribeiro