Banking sector pay gap for women and ethnic minorities

Since 2017 it has been compulsory for all companies in the UK with over 250 employees to publish the difference between the pay (the pay gap) and bonuses (the bonus gap) of their male and female employees. 

The gender pay gap in the UK is largest in the financial and insurance industry. The difference in bonuses is even higher.

The gender pay gap expresses the difference in pay across the whole organisation, and a key reason for the gap is the higher proportion of men in senior roles. It is not to be confused with equal pay, which looks at pay received by men and women for the same role, and is a legal requirement in the UK.

What is the gender pay gap in the banking world?

The finance industry is the worst sector in the UK with the biggest gender pay gap. 

Of the finance organisations we looked at, the worst is HSBC Bank (and its subsidiaries) with a pay gap of over 40%. The lowest are Unity Trust and Scottish Friendly with pay gaps below 5%.

If the pay gap is 35%, this means that women on average earn 35% less than men across the organisation.

Most pay gaps had decreased since we last looked in 2021, with Nationwide and Co-op Bank decreasing the most, by more than 10 percentage points.

But, pay gaps at several brands had increased, with Virgin Money increasing the most.

The pay gap 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.

Why is there a gender pay gap?

While women’s participation in finance is higher than the average across the British economy, female professionals predominantly occupy the lower levels in organisational hierarchies and remain the minority in the top ranks of the sector. 

There are two other key barriers for women identified by Women Working Worldwide:

• The Sticky Floor: Women are more likely to be trapped in lower-paying roles with fewer promotion opportunities.
• The Glass Ceiling: Even when women are qualified for leadership roles, they are overlooked in favour of men.

Both of these barriers are a result of conscious and unconscious biases in decision-making at a workplace, such as a stereotype of women having lower leadership potential than men.

According to the OECD, around 40% of the gender pay gap is linked to the sticky floor (keeping women in low-paid roles), while the remaining 60% comes from the glass ceiling and unpaid care work. 

Banks and building societies: gender pay and bonus gaps 2023

The table below lists 41 banks and building societies, their hourly pay gap, and their bonus gap percentage. It is sorted by worst to best for hourly pay gap, with the worst, i.e the highest gap, at the top of the table.

Some of the smaller companies in our finance guides do not have to report and so we have no data for them.

n/a = not available. Data from UK Government's Gender Pay Gap service, or companies’ own gender pay gap reports or annual reports.

* Figure from 2024 report

*** Triodos’ negative bonus gap was due to a family leave policy which had a return-to-work bonus element which was mainly received by female coworkers returning from maternity leave.

Insurance, pension and investment providers: gender pay and bonus gaps

The table below lists the companies who feature in our insurance, pension and investment guides, and states their hourly pay gap, and their bonus gap percentage. It is sorted by worst to best for hourly pay gap, with the worst, i.e the highest gap, at the top of the table.

Data from UK Government's Gender Pay Gap service, or companies’ own gender pay gap reports or annual reports.

Gender pay gap at smaller companies

We could not find any gender pay gap data for Big Exchange, Castlefield, Charity Bank, Chelsea Building Society,  Covea, ICICI Bank, Liontrust, MoneyFarm, Penfold, Pension Bee, Sarasin, Shepherds Friendly, SVM, Tide, or WHEB/Foresight.

For Saffron Building Society, it was unclear if the figure we found (41%) was the median or mean. For Ecology Building Society, and Reliance we at least found some explanation.

Ecology commented in its 2022 AGM that the methodology for calculating the gender pay gap “can be problematic for small organisations such as Ecology, where even one change of gender in a single role could have a significant impact on the figures due to the small sample size.” Reliance Bank also stated “The Bank does not currently publish its gender pay gap and this can be subject to large swings due to the small number of employees.”

Lack of women in high-paid jobs

The pay gap highlights that men tend to dominate the highest-paying jobs. It was reported that women held only about a third of manager positions in financial services in the EU in 2020.

One of the underlying causes is the amount of unpaid care work done by women which can prevent them from taking higher-paid roles in the workplace. About a third of women in the EU reported stopping work for at least six months for childcare reasons compared to just over 1% of men, in a 2018 survey. And nearly two thirds of women in the UK said caring responsibilities have stopped them applying for a promotion or a new job, in a 2022 survey.

Banks have set targets to narrow the gender imbalance within senior management positions. But the UK government’s Women in Finance Taskforce calculated in 2020 that at the current rate of progress it would take another 30 years to achieve gender parity at senior levels.

What can be done about the gender pay gap?

Is the compulsory reporting making any difference? This is the first time we have surveyed this type of financial company but in the last magazine we looked at the gender pay gap for banks & building societies. Comparing the 2023 data with 2022 data, we found that the pay gap for banks and building societies had decreased for virtually all the companies.

One of the voluntary initiatives introduced by the government in 2016 is the Women in Finance Charter, a pledge for gender balance across financial services which currently has over 400 signatories. Virtually all the companies in these guides are signatories, except for AJ Bell, Scottish Friendly, Big Exchange, Penfold, MoneyFarm, and Sarasin. Most of these companies didn’t publish any gender pay gap data either.

According to the Women in Finance Charter Annual Review 2023, average female representation in senior management for the signatory group had risen to 35% in the reporting year, 1% higher than in the previous year.

But the rate of change is slow. At that rate it would take the financial services industry another 30 years to achieve gender parity at senior levels.

Other possible actions include:

• Develop a positive action plan to encourage and support women to apply for more senior roles.
• Ensure that part-time and flexible work is available at all levels of the organisation.
• Make paternity leave as generous as maternity leave to encourage men and women to share childcare responsibilities.

There are many more suggestions in the Women Working Worldwide report 'Mind the Gap'.

Ethnicity pay gaps in the finance world

Unlike gender pay gap reporting, ethnicity pay gap reporting is still voluntary, and so there is not much data. However the UK government has committed to introducing mandatory ethnicity and disability pay gap reporting for large employers, and says it will shortly be consulting on its proposals.

Reporting is poor, with worse results

While gender pay gap figures were found for over 40 banks and building societies, only 14 appeared to be reporting on their ethnicity pay gap. This was an improvement since we last reviewed this (2022) and found only three, but for those three, HSBC, Lloyds, and Barclays, the pay gap for black employees had got worse.

Only 5 of the 14 now reporting broke figures down beyond “ethnically diverse”, “ethnic minority” or “other ethnicity”, to show the pay gap for black or Asian employees.

In the tables below, the higher the figure, the bigger the pay gap. For instance, black employees at Santander are paid 74p for every £1 that white employees were paid. 

The minus figures indicates an ethnic group with higher pay than the white group.

Table 2 - banks where no ethnicity breakdown is provided 

The context of inequality

In the UK, black and minority ethnic people are 2.5 times more likely to be in relative poverty, and 2.2 times more likely to be in deep poverty (having an income that falls more than 50% below the relative poverty line), than their white counterparts.

The ethnicity pay gap reporting guide for parliamentarians published by Share Action and the Runnymede Trust in 2023 states that “Publishing an Ethnicity Pay Gap (EPG) report is a vital first step in identifying and measuring the scale of racial disparities and tackling institutional racism in any organisation.” It also emphasises the importance of publishing an explanatory narrative and action plan too.

Racial equality efforts stagnating 

A new report by Reboot, a campaign group of senior financial services professionals, found that racial equality efforts were stagnating since its launch four years earlier. 800 employees who have been working in financial services for at least 10 years were surveyed, and nearly two-thirds (62%) believe their leadership teams are paying lip service to diversity without taking meaningful action.

Double inequality for black and minority ethnic women

The Fawcett Society points out that black and minoritised women see the compound effects of both the gender and ethnicity pay gaps. To mark Ethnicity Pay Gap Day 2024, they published Double Trouble, and calculated that, while women of Bangladeshi, Pakistani, and Mixed White and Black Caribbean heritage have ethnicity pay gaps of 14.7%, 11.8% and 10.6% respectively, compared to white British women, if you compare instead to white British men, these pay gaps rise even further to 28.4%, 25.9%, and 25%.

Fawcett’s 2022 Sex and Power report highlighted that black and minoritised women remain almost entirely absent in the UK most senior positions. Illegal pay discrimination was also highlighted, with 52% of black women surveyed reporting experience of being paid less than white colleagues in the same role. The campaign is calling for a legally enforceable 'Right to Know' what a comparison colleague is paid for equal work, for women who suspect they are experiencing pay discrimination to understand their circumstances and be equipped to challenge discrimination. 

How are banks tackling gender inequality?

Natasha Turner, finance journalist, looks at how banks lend money to women and what gender equality initiatives they have.

Gender pay gap data is a great way of finding out what a business – or industry – looks like internally when it comes to gender parity. But that’s only half the story. A business’s day-to-day activities also affect gender equality more broadly.

When it comes to being lent money for businesses, women feel they are being let down, particularly by their banks. A survey last year by small business financier Bibby Financial Services revealed almost half (48%) of women founders found it harder to secure external finance than businesses owned by men, and 51% said it was more difficult than the year before.

Data does show that when women are lent money for their businesses, it’s in smaller amounts. Multiple studies point to this gender funding gap. To pick one, the British Business Bank, a UK government-owned development bank, found the average amount lent to a woman-led business was £174,000, a third of the average £507,000 lent to men-led businesses. And it says this gap is growing.

When it comes to other types of lending (such as mortgages, personal loans, etc.), banks are keen to stress gender has no impact on decisions, but few seem to know their gender lending breakdown. 

Ethical Consumer contacted 23 of them operating in the UK to ask whether they disaggregate their lending data by gender. Of these, five said they don’t, and 16 did not reply.

But two banks we contacted do disaggregate their lending data by gender. And encouragingly, for one of these (Newcastle Building Society), based on new lending advances made in 2024, its split was 39% male, 38% female, and 23% undisclosed.

Gender initiatives in the finance industry

There are several gender initiatives available to finance institutions. We have focused on four collective initiatives and checked which banks and building societies are involved with which initiatives. 

Diversity and Inclusivity Finance Forum (mortgages)

Of the brands in our guides, a total of 13banks and building societies are part of the Diversity and Inclusivity Finance Forum, which aims to “create a more balanced and fair mortgage industry”. Insight into gendered issues, such as domestic violence and maternity pay, can inform flexible approaches to lending, and this appears reflected in the bank’s gender-equal lending data.

Women in Finance Charter

An old classic when it comes to gender banking initiatives is the Women in Finance Charter, but this is focused on banks as employers, rather than the impact of their activities.

Most of the banks and building societies in our shopping guides are signed up to this charter.

Investing in Women Code

The Investing in Women Code was set up in 2019 by the government after the Rose review added to the research around the gender funding gap. Nine banks in our table are signed up to this and some of the Code’s research (on venture capital funding, not banks) points to signatories lending more to women than non-signatories do.

Financial Abuse Code

Another initiative is the Financial Abuse Code, which 15 banks and building societies in our table have signed. Financial abuse, which is part of economic abuse and involves withholding access to or information about finances, can happen to anyone but an estimated one in six women have suffered it. The Code commits banks to awareness and training for staff, and resources and protocol for customers. For example, Lloyds Bank has a dedicated financial abuse support team and hotline.

Independent gender initiatives

As well as the collective gender initiatives outlined above, some banks have their own gender equality initiatives. 

These tend to be the reserve of larger institutions and almost always geared towards “helping” women’s business “confidence” and knowledge, as if the gender funding gap was women’s fault.

Two banks from our table stand out in term of their own initiatives. 

The first is NatWest’s Buy Women Built campaign, which aims to mobilise consumers to buy from women-founded businesses. NatWest Group announced last year it had lent more than £1.5bn to women-led businesses since 2021. Its 2024 annual statement says its total business lending for the year grew by £10bn.

The second is Starling, which has run many gender equality campaigns such as Make Money Equal, focused on bias in financial media; Tech for Good, looking at gender and race bias in algorithms; and Make Pocket Money Equal, commissioned research into gender gaps starting in childhood.

Even though banks do different types of business, by starting to look at lending and initiatives, we can begin to add to the picture that the gender pay gap data shows us.

Additional research by Jane Turner.