Fearless girl in Manhattan

Gender diversity on Wall Street is being hampered by the long-run effects of the pandemic, which has thinned the ranks of female talent and altered workplace attitudes, according to a new report from DBRS Morningstar.

At the board level, the share of female directors for the six largest U.S. banks (the global systemically important banks, or G-SIBs) stood at 40% in 2022, up from 37% in 2021, the firm noted.

However, female representation in the executive ranks remained stalled at 27%, and only one of the largest banks, Citigroup Inc., boasted a female CEO, it said.

Indeed, career advancement remains a challenge for women in the banking sector.

“For every 100 men who are promoted from entry level to manager, only 87 women are promoted, and only 73 women of colour are promoted — likely indicating how women start to lose ground from the very first promotion,” the report said.

This issue was also exacerbated by the pandemic. Typically, men face heftier job losses during economic downturns but the pandemic was “a unique case where women were affected more than men,” the report noted.

Immediately prior to the pandemic in February 2020, the unemployment rate for women was slightly lower than the rate for men, but by April of that year, the rate for women jumped to 16.1%, far above the 13.6% rate for men, DBRS reported.

Alongside the impact on employment levels, the episode also altered workplace attitudes: “Covid-19 prompted a reevaluation of work priorities, particularly for women, who prioritized work flexibility.”

As a result, there’s an increased risk of companies losing “younger women due to inflexible work cultures, potentially hindering the development of future female leaders,” the report said.

“There remains a huge untapped potential that U.S. banks are missing out on from female leadership,” it warned.

The report also found wide variation in gender diversity among the big banks, with women representing 49% of the workforce at JP Morgan and 42% of executive positions, compared with just 13% at Morgan Stanley.

“There is also a more encouraging presence of women in important executive positions at these banks,” the report said, pointing to women leading key divisions such as asset and wealth management, consumer and community banking, and retail banking at JPMorgan and Bank of America Corp.

“Such examples of women assuming pivotal roles in financial leadership within U.S. G-SIBs set a precedent and pave the way for other banks to prioritize such gender-inclusive practices,” it added.

The report called for improved data collection and reporting, and stepped-up corporate efforts to close the gender gap.