frankfurt The times when investors simply slept through the work of the supervisory board are apparently over. Nearly one in four large investors expects a significant increase in shareholder criticism of financial company supervisory boards, for example, with members being removed from general meetings or proposed by others.
Another 34 percent expect a slight increase in criticism.
This is the result of a survey carried out by the consulting firm EY of more than 300 fund managers who invest in European banks, insurers and wealth managers.
The reason is the sometimes large discrepancy between the expectations that the surveyed investors have of the supervisory board and the reality. According to the survey, in addition to economic skills, specialized knowledge of information technology is “very important” to them. In addition, they require skills and experience in digitization and in dealing with the authorities. Topics such as sustainability and cyber security are also becoming increasingly important.
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“Requirements for the composition of supervisory boards have increased tremendously in recent years, and with them the workload and responsibility,” says Thomas Griess, managing partner of German Financial Services at EY. However, currently desired but still underestimated special areas are not so easy to fill.
Diversity is also becoming increasingly important on supervisory boards. More than one in five fund managers say that a balanced ratio of women and men significantly influences the decision to invest in a company. According to EY, investors are also paying increasing attention to the origin and age of supervisory board members. Many banks and insurers have to catch up here, especially in Germany.
German financial companies need to be more diverse
EY consultants substantiate the diversity, which often needs improvement, with figures they collected from 99 European financial companies, including ten German ones. The basis for the evaluation was the MSCI European Financials Index, which includes names such as HSBC, Allianz, Zurich, UBS, BNP Paribas, Banco Santander and Axa.
According to the study, 37 percent of the supervisory board members of German banks and insurers were women. Financial companies across Europe have an average of 44 percent.
Compared to the proportion of women on executive boards, that’s decent: A study by personnel consultancy Heidrick & Struggles recently found that only 21 percent of board members at 30 insurers older Europeans are women.
On the other hand, the internationality of the German supervisory boards is lower in a European comparison. In Germany, 32 percent of the members of the supervisory boards of financial companies have a foreign passport, compared to 36 percent in Europe. The average age of the directors of European financial companies is 61 years. Here the German inspectors are slightly shorter with an average age of 60 years.
The relatively advanced age of supervisory board members can be explained by the fact that “supervision requires several years of professional experience in managerial positions,” says Max Weber, a partner at EY. However, only two percent of the supervisory boards of European financial companies have experience in previous positions in the area of sustainability. In the fintech sector, it is even just one percent.
Plus: Equality issues in the financial sector: Germany is falling behind