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Banking sector pay gap for women and ethnic minorities

Women and ethnic minorities are still facing inequalities in the finance world. Jane Turner explores the different pay gaps are and looks at which banks are taking action to address the inequality.

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

The gender pay gap looks at all roles at all levels of an organisation. It is not to be confused with equal pay, which looks at pay received by men and women for the same role. Equal pay for equal work 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 relation to a gender pay gap, the differential being more than twice as wide as in other sectors in the year to April 2021.

In the finance sector, firms are paying men, on average, almost 24% more per hour than women. This means that women in the finance sector earn £0.76 for every £1 that men earn.

Across all sectors, the gap is around 11.6%.

On average, women in finance also earned 37% less in bonuses than men, compared with 35% across other sectors.

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.

Banking gender pay and bonus gap 2021/22

The table below lists 34 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.

Banks and the gender hourly pay gap rate and bonus gap
Bank / building society group Hourly pay gap % Bonus gap % (average is 37%)
HSBC Bank plc 51.3 72.2
JP Morgan Securities 48.4 69.4
Shawbrook Bank 44.5 53.7
Lloyds Bank plc 40.9 23.8
Barclays plc 40.4 75.8
Saffron Building Society 38 (average not median) n/a
Handelsbanken PLC 37.6 100
Goldman Sachs Int’l 37.3 68.8
Cumberland Building Society 37 82.5
Paragon Finance plc 36.4 3.4
Nationwide Building Society 34.3 2.6
NatWest plc 34.2 92.9
West Bromwich Building Society 33.8 53.7
Coventry Building Society 33 38.2
Al Rayan 32.4 35.8
OneSavings Bank plc 32 43.4
Virgin Money 30.4 (2019/20 figures) 32.1
Santander UK plc 30.4 36.2
Leeds Building Society 29.8 32
Principality 29.6 30.7
Co-op Bank 28.7 26.5
TSB Bank 25.6 24.6
Revolut 25.2 56.4
Yorkshire Building Society 24.5 31.7
[Average for finance sector] 24  
Triodos 21.8 (from Annual Report 2021) n/a
Bank of Ireland 19 No bonuses paid
Newcastle 18.6 0
Tesco Personal Finance plc 12.4 17.4
Metro Bank 12.2 45.3
NS&I 11.23 (only 2018/19 figures available) 24.7 (only 2018/19 figures available)
Starling 10.3 0
Post Office 10 5
Monzo 4.3 40

n/a = not available. Data from UK Government's Gender Pay Gap service

We could not find any gender pay gap data for Ecology Building Society, Danske Bank, Charity Bank, ICICI Bank or Gatehouse Bank.

Lack of women in high-paid jobs

The pay gap obviously highlights that men tend to dominate the highest-paying jobs. Women had only 29% of these top jobs whilst men had 71%.

One of the underlying causes is the burden of unpaid care which falls disproportionately on women preventing them from taking up better paid, full-time or more senior roles. And that increased during the Covid-19 pandemic.

Banks have set targets to narrow the gender imbalance within senior management positions. Usually the target is to achieve an unambitious 30% female representation and most have met these targets or are on track to meet them.

The Women in Finance Taskforce calculated that at this rate it would take another 30 years to achieve gender parity at senior levels.

But more can be done, such as:

  • 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.

Largest banks’ progress on closing gender inequality

We looked at five of the largest UK banks by asset size with targets for percentage of women in senior leadership positions, to see how well they were doing in addressing the lack of women in senior roles.

Barclays, Coop and Nationwide have achieved their stated targets thus far (for either 2020 or 2021) - as can be seen in the table below.

The Co-op Bank has committed to achieving 45% women in senior roles by the end of 2023.

The Nationwide has now increased its target to 50% by 2028 after it missed its original target of 37% by 2020.

Banks and targets for women in senior jobs
Bank Group Target for women in senior jobs Results
Barclays 28% by 2021 29% by 2021
Co-op Bank 40% by 2020 42% by 2021
HSBC 30% by 2020 30.3% by 2020
Lloyds Bank 40% by 2020 38% by 2021
Nationwide 37% by 2020 35.2% by 2021

Ethnicity pay gap in the finance world

A 2020 report by the Runnymede Trust showed a vast discrepancy in pay between ethnic minorities and White British workers.

For instance, in the UK, BME (Black Minority and Ethnic) young adults are 47% more likely to be employed on a zero-hour contract than white young adults. Covid-19 has worsened existing inequalities; the unemployment rate for BME workers is over twice as high than that of white workers, with the gap widening.

Comprehensive ethnicity pay gap reporting is still voluntary in the UK. It was very nearly made mandatory, but Boris Johnson’s government rejected calls to make it compulsory saying he didn’t want to overburden British business!

Only a handful of banks voluntarily disclosed figures for 2020/21 and these are shown in the table below.

The higher the figure, the bigger the pay gap. For instance, black employees at Lloyds are paid 82p for every £1 that white employees were paid. The minus figures indicate that the average pay of the ethnic minority group is higher than the white group.

Pay gap for ethnic minorities
Bank Black Asian Minority ethnic
Lloyds 18.1 14 -2.8
HSBC 13.2 -4.9 -12.5 (‘mixed race’ and ‘other ethnicities’)
Barclays 13.8 -9.6 4.1
Stacks of coins varying in size, from left highest, to right lowest: White British, Indian, Pakistani, Black Caribbean, Black African, Bangladeshi
Black African and Bangladeshi households have 10 times less wealth than White British people. Image from Runnymede Trust.

Reboot’s ‘Race to Equality’ report on the under-representation of ethnic minorities in the finance sector found unconscious or conscious bias and the lack of role models made it difficult to break into the industry, let alone do well.

On top of that, the intersectionality between gender and ethnicity reveals that female ethnic minority workers experience a larger pay gap than both ethnic minority male, and white female workers.

An analysis of Office for National Statistics data from 2020 by the Labour Party found that, compared to white men:

  • Pakistani women earned 31% less
  • Bangladeshi women earned 28% less
  • Black African women earned 26% less

These figures are for all sectors, not the finance sector. But we can only assume that in the finance sector these figures would be worse than they are for other sectors, as per the findings for gender. And whilst the average pay gap for women in finance is 24%, it’s clear to see that things are worse for minority ethnic women.

Ethnic minority women are impeded both by institutional racism and their expected roles as unpaid carers.

Many banks are now voluntarily monitoring ethnicity pay gaps and some of them publish the results.

Responsible investment advocacy group ShareAction is campaigning for ethnicity pay gap reporting to be mandatory, like gender pay gap reporting, and launched its ethnic pay-gap reporting campaign earlier this year on reporting standards among FTSE 100 companies.

It has started off by targeting the finance sector. Go to the ShareAction page about ethnicity and pay gap to find out more.