The Incredible Shrinking Statistic: Female Bank CEOs

Here's a sad set of numbers.

There are close to 100 bank holding companies in the United States with assets of more than $10 billion. In 2011, just five of these companies had a female CEO. Now, only three do. And that figure looks set to dwindle further with HSBC’s Irene Dorner planning to retire on Nov. 1.

How can it be that the fight for gender diversity in the banking industry's C-suites has lost so much ground?

The answer isn’t nearly as shocking as the numbers are.

In times of crisis or great change – which pretty much sums up banking since 2007 – usually one of three things happens with top management:

1. They close ranks and fall back on the people they know, trust and feel the most comfortable around;

2. They convince the board it would be unwise to change horses midstream, and few changes are made;

3. They are swept out and replaced by people who represent significant change in approach, style or strategic focus.

In the first scenario, a pattern of last-in-first-out often emerges, and in the worst of the financial crisis and the early aftermath, this was devastating to the ranks of women just emerging in senior roles at financial institutions. There were the ousters of Zoe Cruz at Morgan Stanley, Erin Callan at Lehman Brothers and Sallie Krawcheck at Bank of America. These and many more women suddenly lost their place in the pipeline of potential CEOs.

The second scenario, maintaining the status quo, for most banks involves holding onto a male CEO with mostly male reports. This doesn’t make a given C-suite any less diverse. But when diversity gains get rolled back elsewhere, these firms can’t help but reinforce the weakness in the percentage of senior leadership roles held by women industrywide.

This leaves the third scenario, in which a radical change is desired, as one of the few ways for a female CEO candidate to come to the fore. That’s what happened with Dorner, a Brit who was brought in on a clean-up mission after HSBC's U.S. operations got caught up in subprime lending, money laundering and sanctions violations.

Indeed, most of the pioneering female executives you could probably name off the top of your head – General Motors CEO Mary Barra, Yahoo CEO Marissa Mayer, former Xerox CEO Anne Mulcahy – ascended at a time when their firms were foundering, and there are all kinds of theories about the nature and leadership traits of women that may explain why this is the case.

The problem with having women hitch their fortunes to turnaround stories is that turnarounds are hard to pull off. And when they happen, they tend to unfold slowly – something that doesn’t mesh well with the short-termism that pervades corporate America.

Not all female CEOs get handed the keys to a lemon, but it happens enough that women leaders, unsurprisingly, have higher failure rates than their male counterparts. A recent Strategy& study of CEOs at 2,500 of the world’s largest companies found that in the past decade, 38% of the women had been fired, versus 27% of the men. In many cases, the women had cracked the glass ceiling only to fall off what academics have dubbed the glass cliff.

The glass cliff presents a double threat to gender diversity goals. For starters, it’s potentially very discouraging to women in the pipeline. Aspiring female leaders already face enough obstacles to professional success – the recently documented confidence gap between men and women, the pressures of the unequal division of labor at home, the disheartening data on unequal pay, not to mention the unconscious biases and outright discrimination that have yet to be fully filtered out of the process for hiring and promoting people. Is it fair to expect women to continue committing themselves to overcoming all of this, just so they, too, might someday get the opportunity to fail at fixing up someone else's mess?

The other big danger of the glass cliff is that it gives companies a convenient excuse to reverse the progress of diversifying the C-suite. (“Another female CEO? We tried that. It didn’t work.”)

After hiring women who they hoped would be their corporate saviors, Hewlett-Packard replaced Carly Fiorina with Mark Hurd, while Yahoo, having sacked Carol Bartz, hired Scott Thompson. Of course, when the men flamed out, arguably in even more spectacular fashion than the women who preceded them, H-P hired Meg Whitman and Yahoo recruited Mayer. So the pendulum would seem to swing in both directions.

But in banking, it’s too soon to determine whether large institutions would ever hire a second female CEO, as so few have ever hired their first. (Those that have replaced women with men in the CEO spot, like BMO Harris Bank and RBS Citizens, did so only recently, so it could be years before a sizable bank is in a position to appoint a female CEO for a second time.)

It is not yet clear whether Dorner is another glass cliff casualty or if her planned retirement (at 59) from HSBC on Nov. 1 is something she designed on her terms. What is clear is that HSBC is set to lose one of its greatest advocates and role models for women in banking.

It may very well be the case that Dorner's designated successor, Patrick Burke, is the perfect person to lead HSBC US into its next phase. And BMO Harris Bank and RBS Citizens may have had it exactly right when they appointed their respective current CEOs, Mark Furlong (who replaced Ellen Costello) and Bruce Van Saun (successor to Ellen Alemany).

But with Costello and Alemany gone and Dorner set to join them, this would leave KeyCorp’s Beth Mooney and Ally Bank’s Barbara Yastine as the only female CEOs of U.S. banks with $10 billion or more in assets. In 2014, that just seems like an awfully small cohort for any industry.