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Japan’s financial regulators have warned that regional banks are prone to “gender-washing” in disclosures to investors due to legal ambiguity over leadership roles occupied by women.
An average of just 13.7 per cent of managers at regional banks were women, compared with an average 20.8 per cent at the country’s three megabanks, according to a survey of 100 regional banks published by the Financial Services Agency last month.
But the tally included positions that would be considered relatively junior at most banks and did not typically oversee many subordinates. Once those titles were stripped out, the survey showed that only an average 8.1 per cent of women held managerial roles at the regional lenders.
“Some of the figures by the regional banks suggest gender-washing,” said Tatsufumi Shibata, deputy director-general at the FSA’s policy and markets bureau and previously the 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’s problematic.”
The survey also showed a wide gender pay gap at regional banks, especially among employees in their 40s, with male bankers earning an average of ¥8.7mn ($60,300), compared with ¥5.3mn for their female colleagues.
“Regional banks are typically viewed as old, traditional Japanese firms with a seniority-based and male-dominated system,” Shibata said, calling for a “transformation” of corporate culture.
Misgivings about disclosures from regional banks have emerged only a year after the Japanese government made it mandatory for listed companies to report diversity indicators including their gender pay gap and percentage of female managers.
Prime Minister Fumio Kishida has set a goal for women to occupy 30 per cent of executive positions at top listed companies by 2030 — a target previous administrations have repeatedly aspired for and missed. On Kishida’s watch, Japan has dropped to 125th in the World Economic Forum’s gender equality ranking, from 116th last year.
Data from the health ministry shows that about 12 per cent of women held managerial positions at Japanese companies during the 2021-22 financial year.
The increasing scrutiny also comes as companies are under pressure from investors to increase the number of women on their boards. Large asset managers, sovereign wealth funds and proxy advisers have been considering gender diversity in their voting behaviour and recommendations in recent years.
At regional banks, the percentage of female managers also ranged widely, from 1.5 per cent to 51.9 per cent — a discrepancy that Shibata said could be due to the broad definition of management roles under Japanese regulations.
According to the health ministry, a female employee can be designated a manager if she holds the title of kacho, or “section chief”, which is defined as an employee in charge of a unit with two or more subsections and who supervises 10 or more employees.
But that definition can be malleable, as the ministry also says a company can categorise a female employee as a manager if she carries out the same duties as other section chiefs, even if she does not 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 inflate the figures for female representation in senior roles that the banks report. Men holding similar roles would not be defined as managers.
Among the regional banks, Niigata-based Daishi Hokuetsu Bank, The Senshu Ikeda Bank in Osaka and The Hyakujushi Bank based in Kagawa prefecture disclosed in June that more than 20 per cent of women occupied management positions, but those numbers included deputy section chiefs or managers.
Officials at the banks said the designation of female managerial roles was in accordance with health ministry rules. “If we restrict female managers to section chiefs, then the number will fall significantly,” said one official at a regional bank.
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