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SHOPPING GUIDE Banks and inequality High pay in the financial sector As the financial sector is known for its high pay excesses, we show the pay of the highest paid director of each company in these guides. Ethical Consumer considers any remuneration over £1 million to be excessive, so companies awarding pay of £1 million or over (shaded red) lose half a mark in the Anti-Social Finance category. A comparison of the 2016 and 2019 figures shows that many have risen, and Citibank (which is, notably, an American company) threatens to rise out of the stratosphere. But quite a few have also fallen. We asked Luke Hildyard of the High Pay Centre for his take on this. He said: “Top pay in general has been pretty flat over the past decade, though it remains extremely high by longer-term historical standards.” He further pointed out that there have been some specific downward pressures on pay in the financial sector in the UK and EU, including increased reporting requirements and greater shareholder control, the EU cap on bonuses, and the Financial Conduct Authority’s Asset Management Market Review which scrutinised costs charged by the investment industry. However, as Hildyard put it: “pay in the financial services sector is still extraordinarily high.” High pay in the boardroom plays a key part in reinforcing rising inequality globally and provides a stark illustration Bank Banks & Building Societies Top Pay 2019 Top Pay 2016 Citibank £19.5m £11m Tesco £6.4m £4.2m Banco Santander (Cater Allen) £6.1m £5.3m Barclays £5.9m £4.2m Lloyds (Bank of Scotland, Halifax, Scottish Widows, Birmingham Midshires) £5.1m £5.5m HSBC (First Direct, M&S money) £4.9m £5.6m Virgin Money (including Clydesdale Bank, Yorkshire Bank) £3.4m £2m Paragon £2.8m £1.9m Co-op Bank Danske Bank £2.6m £4.5m £2.5m £1.7m RBS Group (RBS, Coutts, NatWest, Ulster) £2m £3.5m Oaknorth £1.8m – J Sainsbury £1.7m £2.3m OneSavings Bank (Kent Reliance) £1.6m £910K TSB Bank £1.4m £3.7m Nationwide BS £1.3m £3.4m Yorkshire BS (Chelsea BS, Norwich and Peterborough BS) £971K £701K Coventry BS £861K £970K Bank of Ireland (Post Office) £854K £843K Metro Bank £829K £1.3m Skipton BS £829K £921K ICICI Bank £720K £472K Shawbrook £715K £3.5m Leeds BS £659K £350K West Bromwich BS £659K £636K Al Rayan £656K £253K Newcastle BS £463K £314K Svenska Handelsbanken £412K £384K Principality £394K £535K Cumberland £358K £275K Triodos £312K £265K Charity Bank £151K £140K Ecology £123K £96K Monzo £117K – Revolut – – Starling – – Investment Funds Investment Fund Top Pay 2019 Top Pay 2016 Janus Henderson Group £5.7m £2.2m AXA £5.5m £3.2m BMO £5.4m £4.6m Standard Life Aberdeen £4.6m £2.7m Legal & General Group £4.6m £5.3m Liontrust Asset Management £4.4m £1.6m Aegon (Kames Capital) £3.8m £1.2m (estimate) SVM Asset Management £3.8m – Jupiter Asset Management Group £2m £3.8m Quilter PLC £1.9m – Royal London Asset Management £1.9m £3m Ecclesiastical (EdenTree) £1.5m £1.4m Impax Asset Management Group £1.1m £452K Rathbone Brothers £1.1m £1.4m Svenska Handelsbanken £412K £384K Triodos £312K £265K Castlefield Partners £210K – Sarasin & Partners LLP – – WHEB Asset Management – – of why the predatory and self-interested business models we see around us need radical reform. Why anyone would not feel adequately remunerated with the kind of still-relatively-generous sums available at the lowest ten banks will remain a mystery to most people. Key – figure could not be found top pay in 2019 over £1 million Ethical Consumer Sept/Oct 2020 26
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The gender pay gap in the banking sector In the third year of the compulsory publishing of a gender pay gap for all companies with over 250 employees, the finance industry comes in as the second worst sector, after education. Finance firms are paying the average man almost 25% more than the average woman. And that gap has increased by about 1% on last year’s figures. Across all sectors, the gap is around 17%.1 another. Often women don’t ask for more money and are just grateful to be offered a job.”3 Fifty years on from the Equal Pay Act of 1970, campaigning women’s rights charity the Fawcett Society says that one of the many reasons that there is a gender pay gap is because there is still pay discrimination. Because there is generally not a transparent pay framework, many women don’t know that they are earning less than their male counterparts. However, this financial year the government suspended the enforcement of gender pay gap reporting due to COVID-19, so only about a quarter of financial companies have actually reported.1 We’re sure that the billionpound businesses involved are delighted to be relieved of what must have been a couple of days of research work each! The figures are based on the median – the middle wage of a range when everyone’s wages are lined up from smallest to largest. The median is used rather than the average or mean because the median is a more representative figure which is not skewed by a few highly paid people.2 Individual banks l  HSBC posted an overall pay gap across its 8 divisions (consumer, corporate, investment ...) of 47.8%, almost the same as last year. (The gap at just HSBC's UK consumer banking (retail) arm was 18.7%.) It said it was because of fewer women in high-paid senior roles and more women in junior positions or parttime jobs.1 l  Between 2017 and 2019, Lloyds Bank and Santander's UK consumer banking operations have closed their gap by more than 2%, but are still above the sector average at 40.5% and 26.6% respectively. l  Reporting for the first time, NatWest posted a gender pay gap of 34.1%. l  Co-op Bank's gap remained at 22.6%. For bonuses, the average gender pay gap is 37.7%, an increase from two years ago. Barclays' commercial arm and NatWest were paying out bonuses that are over 50% higher for men, on average. What can be done? Ann Cairns is executive vice-chair of MasterCard and co-chair of the 30% Club, which aims to boost the number of women in senior leadership. She says that she sees companies are starting to take their pay gaps seriously, but that there is a need to change the corporate culture which will take a long time. Dame Helena Morrissey, one of the City's most high-profile women and founder of the Diversity Project, says that some firms are just seeking to comply with the law with "woolly or non-existent" plans to improve.1 A spokesperson for the Women’s Equality Party adds that the seeds of the gender pay gap are sown from a young age. “Our education system continues to influence gender norms that lead girls into lower paying jobs that are less valued,” they explained. And Dr Julie Davies of the Manchester Metropolitan University Business School concurs “... women don’t negotiate their salary in their first role due to societal pressures, and so there is a cumulative effect as they move from one job to To close the gap, employers should: l  Develop a positive action plan to encourage and support women to apply for more senior roles. l  Ensure that part-time and flexible work is available at all levels of the organisation. l  Make paternity leave as generous as maternity leave to encourage men and women to share childcare responsibilities. l  Improve transparency by extending gender pay gap reporting to companies with 100 or more employees. l  Introduce gender pay gap reporting by ethnicity – Fawcett found that the gender pay gap between White men and Black African women and Pakistani & Bangladeshi women was higher than for White women. l  Require employers to publish an action plan to tackle gender pay gaps with meaningful sanctions for noncompliance. References: 1 BBC https://www.bbc.co.uk/news/business-51702864, HSBC's gender pay gap hits 47% as City split widens, 9 March 2020 2 The Guardian, What is gender pay gap reporting, and what does it mean? 28 Feb 2019 – https://www.theguardian.com/society/2019/feb/28/what-is-gender-pay-gap-reporting-and-what-does-it-mean 3 The Independent, 29 May 2020, WHAT IS THE GENDER PAY GAP AND HOW IS IT DIFFERENT FROM EQUAL PAY? www.independent.co.uk/life-style/women/gender-pay-gap-equal-pay-women-paid-less-motherhood-a8856121 ethicalconsumer.org 27

The gender pay gap in the banking sector In the third year of the compulsory publishing of a gender pay gap for all companies with over 250 employees, the finance industry comes in as the second worst sector, after education. Finance firms are paying the average man almost 25% more than the average woman. And that gap has increased by about 1% on last year’s figures. Across all sectors, the gap is around 17%.1

another. Often women don’t ask for more money and are just grateful to be offered a job.”3

Fifty years on from the Equal Pay Act of 1970, campaigning women’s rights charity the Fawcett Society says that one of the many reasons that there is a gender pay gap is because there is still pay discrimination. Because there is generally not a transparent pay framework, many women don’t know that they are earning less than their male counterparts.

However, this financial year the government suspended the enforcement of gender pay gap reporting due to COVID-19, so only about a quarter of financial companies have actually reported.1 We’re sure that the billionpound businesses involved are delighted to be relieved of what must have been a couple of days of research work each!

The figures are based on the median – the middle wage of a range when everyone’s wages are lined up from smallest to largest. The median is used rather than the average or mean because the median is a more representative figure which is not skewed by a few highly paid people.2

Individual banks l  HSBC posted an overall pay gap across its 8 divisions (consumer, corporate, investment ...) of 47.8%, almost the same as last year. (The gap at just HSBC's UK consumer banking (retail) arm was 18.7%.) It said it was because of fewer women in high-paid senior roles and more women in junior positions or parttime jobs.1

l  Between 2017 and 2019, Lloyds Bank and Santander's UK consumer banking operations have closed their gap by more than 2%, but are still above the sector average at 40.5% and 26.6% respectively. l  Reporting for the first time, NatWest posted a gender pay gap of 34.1%. l  Co-op Bank's gap remained at 22.6%. For bonuses, the average gender pay gap is 37.7%, an increase from two years ago. Barclays' commercial arm and NatWest were paying out bonuses that are over 50% higher for men, on average.

What can be done? Ann Cairns is executive vice-chair of MasterCard and co-chair of the 30% Club, which aims to boost the number of women in senior leadership. She says that she sees companies are starting to take their pay gaps seriously, but that there is a need to change the corporate culture which will take a long time.

Dame Helena Morrissey, one of the City's most high-profile women and founder of the Diversity Project, says that some firms are just seeking to comply with the law with "woolly or non-existent" plans to improve.1

A spokesperson for the Women’s Equality Party adds that the seeds of the gender pay gap are sown from a young age. “Our education system continues to influence gender norms that lead girls into lower paying jobs that are less valued,” they explained.

And Dr Julie Davies of the Manchester Metropolitan University Business School concurs “... women don’t negotiate their salary in their first role due to societal pressures, and so there is a cumulative effect as they move from one job to

To close the gap, employers should: l  Develop a positive action plan to encourage and support women to apply for more senior roles. l  Ensure that part-time and flexible work is available at all levels of the organisation. l  Make paternity leave as generous as maternity leave to encourage men and women to share childcare responsibilities. l  Improve transparency by extending gender pay gap reporting to companies with 100 or more employees. l  Introduce gender pay gap reporting by ethnicity – Fawcett found that the gender pay gap between White men and Black African women and Pakistani & Bangladeshi women was higher than for White women. l  Require employers to publish an action plan to tackle gender pay gaps with meaningful sanctions for noncompliance.

References: 1 BBC https://www.bbc.co.uk/news/business-51702864, HSBC's gender pay gap hits 47% as City split widens, 9 March 2020 2 The Guardian, What is gender pay gap reporting, and what does it mean? 28 Feb 2019 – https://www.theguardian.com/society/2019/feb/28/what-is-gender-pay-gap-reporting-and-what-does-it-mean 3 The Independent, 29 May 2020, WHAT IS THE GENDER PAY GAP AND HOW IS IT DIFFERENT FROM EQUAL PAY? www.independent.co.uk/life-style/women/gender-pay-gap-equal-pay-women-paid-less-motherhood-a8856121

ethicalconsumer.org 27

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