Japanese banks accused of ‘gender discrimination’ by replacing women in management

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Japan’s financial regulators have warned that legal ambiguity over women’s leadership roles puts regional banks at risk of “gender-deception” in disclosures to investors.

According to a survey of 100 regional banks published last month by the Financial Services Agency, an average of only 13.7 percent of managers in regional banks were women, while an average of 20.8 percent were women in the country’s three megabanks.

But this number includes positions that would be considered relatively junior in most banks and which typically do not oversee many subordinates. Once these titles were stripped away, the survey found that on average only 8.1 percent of women held managerial roles at regional lenders.

“Some data from regional banks suggests gender-fraud,” said Tatsufumi Shibata, deputy director general of the FSA’s policy and markets bureau and previously deputy head of its supervision division.

“It’s also an issue of double standards,” Shibata said in an interview with the Financial Times. “For example, if the position of assistant section chief is considered a managerial role for a female employee but not for a male employee, that is problematic.”

The survey also showed a wide gender pay gap at regional banks, especially among employees over the age of 40, with male bankers earning an average of ¥8.7 million ($60,300), while their female colleagues earned an average of ¥5.3 million.

Shibata called for a “change” in corporate culture, saying “regional banks are generally viewed as old, traditional Japanese firms with seniority-based and male-dominated systems.”

Fears about disclosures by regional banks come just a year after the Japanese government made it mandatory for listed companies Report Diversity Indicators Including their gender pay gap and percentage of women managers.

Prime Minister Fumio Kishida has set a target for women to hold 30 per cent of executive positions in top listed companies by 2030 – a target that previous administrations have repeatedly aspired to and missed. Under Kishida’s watch, Japan has dropped from 116th last year to 125th in the World Economic Forum’s gender equality rankings.

About 12 percent of women held managerial positions in Japanese companies during the 2021-22 fiscal year, health ministry data showed.

The growing scrutiny is also coming as companies face pressure from investors to increase the number of women on their boards. Large asset managers, sovereign wealth funds and proxy advisors have been increasingly considering gender diversity in their voting behavior and recommendations in recent years.

Among regional banks, the percentage of women managers also ranged widely, from 1.5 percent to 51.9 percent — a discrepancy Shibata said may be due to the broad definition of management roles under Japanese regulations.

According to the Ministry of Health, a female employee can be designated as a manager if she has the title Kachoor “section head”, defined as an employee in charge of a unit with two or more subdivisions and who supervises 10 or more employees.

But that definition may be flexible, as the ministry also says a company can classify a woman employee as a manager if she performs duties similar to other section heads, even if she doesn’t hold the title. There is no obligation for companies to define those equivalent responsibilities.

The effect is to expand the pool of women who qualify as managers and increase the figures for female representation in senior roles that banks report. Men performing the same role would not be defined as managers.

Among regional banks, Niigata-based Daishi Hokuetsu Bank, Senshu Ikeda Bank in Osaka and Hyakujushi Bank based in Kagawa Prefecture disclosed in June that more than 20 percent of women held management positions, but those numbers included subdivision heads or Managers included. ,

Bank officials said the designation of women managerial roles was in accordance with health ministry rules. “If we restrict women managers to section heads, the number will drop significantly,” said an official at a regional bank.