When Chief Executive Michael Corbat announced a long list of promotions and executive changes at Citigroup (NYSE:C) on Monday, one notable feature of the lineup was its all-male cast.
The only woman named in Corbat's 800-word memo was Sara Wechter, his new chief of staff, who held the same role for Chairman Michael O'Neill. All 13 of the executives now reporting directly to Corbat are men.
Male dominance is an age-old feature of big banks' executive suites, but it appears to be particularly acute at Citigroup, which now counts only one woman among its 24-member operating committee. Cece Stewart, the president of U.S. consumer and commercial banking, reports to global consumer bank head Manuel Medina-Mora, who was promoted to co-president of Citigroup this week.
Stewart was not mentioned in the memo, and her role was unchanged by the reorganization, according to Citi spokeswoman Shannon Bell.
The lack of gender diversity among Corbat's top lieutenants could lead to another round of unflattering scrutiny at Citigroup, which has spent the past five years trying to edge out of the spotlight. It is also the latest example of a persistent industry-wide trend that critics argue hurts more than just banks' reputations. Companies lacking boardroom and executive-suite diversity tend to underperform and expose themselves to operational risks, corporate governance experts say.
"A lack of diversity means that everybody thinks the same, nobody questions the strategy, and nobody questions whether there are better ways of doing things," says Wendy Watson, a former executive vice president of global services for State Street (STT) and a board member at Citizens Financial Group and RBS Citizens.
In the financial services industry, "there are plenty of well-qualified women, but when it comes down to the crunch and things are tough, the men revert to their comfort zone, which is people who look just like them," she adds.
Women do run several businesses at Citigroup, including its private bank, the U.S. retail bank, its North American markets and transaction services businesses and the OneMain Financial subprime lending unit Citigroup is trying to sell. None of those women report directly to the CEO. (American Banker recognized several Citigroup executives in its 2012 ranking of the Most Powerful Women in Banking; Julie Monaco, head of North American transaction services, was ranked as the 10th most powerful woman in banking.)
Citigroup also promised to do better — eventually.
"While our CEO's limited number of direct reports does not reflect the diversity of our company leadership, we anticipate this will change over time due to our deep pool of talent," Citi spokeswoman Bell said on Thursday in an email reply to questions. The bank declined to make any executives available to discuss gender issues.
There is considerable evidence that including women in their highest echelons improves companies' performance: the nonprofit research organization Catalyst has found that companies with three or more women directors get significantly better returns on sales, investment and equity than those with no women on the board. This is true even in the high-stakes and high-testosterone finance world: this week, a report from the professional services firm Rothstein Kass found that hedge funds run by women produced three times the returns of the average hedge fund in the third quarter.
There are also potential legal risks for banks that do not promote women. In recent years, current and former employees have filed lawsuits alleging gender bias at companies including Citigroup and Bank of America, and Morgan Stanley settled similar complaints.
The gender gap is an issue that has resonated well beyond banking lately; The New York Times this week highlighted President Barack Obama's male-dominated inner circle. But the pattern gets repeated with depressing regularity in the financial services industry, where few women rise to the top ranks and those that do often seem to fall out amid intense public scrutiny. Among the most recent high-profile casualties: Sallie Krawcheck was ousted from first Citigroup and then Bank of America (BAC), and Ina Drew was one of the highest-ranking executives to take the fall in the wake of JPMorgan Chase's (JPM) London Whale losses.
The gender gap is controversial as well as persistent. Some former senior bank executives declined to comment, citing the delicacy of the topic. Privately, however, they expressed frustration with the pervasiveness of the gender imbalance at big banks.
"There's been no progress," said one consultant who works with big banks and agreed to speak only on condition of anonymity. "It's demoralizing on a company, case-by-case basis and it's demoralizing in the aggregate."
Industry insiders were reluctant to blame Corbat directly. The paucity of women in Citi's upper ranks predated him, they note. What's more, the new CEO is grappling with the delicate task of retaining top talent while assuring employees that the bank is in steady hands following the abrupt ouster in October of his predecessor, Vikram Pandit.
Corbat's promotions on Monday appear to have been designed to give the appearance of continuity and involved several executives groomed during Pandit's regime — a regime that itself had been dominated by men.
Other mega-banks have done marginally better than Citi at training and promoting women to senior leadership roles recently. Bank of America appears to have done the most to promote women and comes closest to achieving parity; four of Brian Moynihan's ten executive management team members are women. At Wells Fargo (WFC), three of the ten people who report directly to CEO John Stumpf are women. At JPMorgan Chase (JPM), just four of the 17 people reporting directly to CEO Jamie Dimon are women, including new chief financial officer Marianne Lake.
Some of those executives are serving in what Citizens Financial director Watson calls "female-designated roles," meaning they are running human resources or marketing departments rather than business units. In "real operational jobs, women are just underrepresented," she says.
Women have fewer opportunities to train for operational roles in all industries, according to Catalyst, a November report found that companies give male employees more positions involving profit-and-loss responsibility, managing direct reports or having responsibility for a budget of more than $10 million.
Steven Eckhaus, a partner at Katten Muchin Rosenman LLP and a Wall Street compensation advisor, has counted several prominent women among his clients and says that Citigroup's all-male leadership team might generate some silver linings.
"When something like this happens, the board will pay attention," says Eckhaus. "I'm sure the board and human resources and the upper level of the C-suite will look into why this is."
Avivah Wittenberg-Cox, head of the gender-focused consultancy 20-first, is less optimistic. Banks tried hard to improve diversity after the financial crisis, when their every move was under scrutiny, she says.
Now that the worst is over, "the old status quo may be coming back and newly acceptable," according to Wittenberg-Cox. When it comes to the benefits of gender equality, "there are companies that bought it and changed, and there are those that didn't."