The absence of female investment bankers within the upper echelons of UBS AG is one of the weaknesses that led to a culture of arrogance and fraud at the Swiss banking giant over the past decade, the bank's CEO Andrea Orcel told a British parliamentary panel Wednesday.
"I think [the gender ratio] is a shortcoming of UBS,” Orcel said in reply to a question from a British lawmaker who prodded him on whether the bank's high percentage of male employees had made creating an ethics-focused corporate culture so elusive.
Orcel, who is a man, may be the first high-level banker to acknowledge that gender imbalances may help fuel the reckless risk-taking and legal envelope-pushing that appear to be endemic within global megabanks.
The comments about women were just one admission in Orcel's testimony to the U.K.’s Parliamentary Commission on Banking Standards, which is tasked with questioning UBS officials in the aftermath of a $1.5 billion settlement with international regulators, who accused the Swiss banking behemoth of engaging in “epic” and “pervasive” efforts to manipulate benchmark lending rates.
“There were certainly elements of our culture that were negative and that need to be rooted out and elements of our culture that we didn’t understand,” Orcel told the commission, according to Bloomberg. “We all got probably too arrogant, too self-convinced that things were correct the way they were.”
(Despite these concessions, Orcel still blamed UBS's most egregious violations on the many mergers the bank has gone through over the past decade.)
Academics have long argued that the male-centric culture of banking leads to increased risk taking. A 2012 book by neuroscientist and former trader John Coates documented a study of a group of London traders that measured their levels of testosterone throughout the day, finding high levels of the hormone correlated with ill-timed trading decisions. Women make up less than 5 percent of traders, but the study also found that "when it comes to making and losing money, women may be less hormonal than men."
Other studies have found men overwhelmingly tend to set themselves up in winner-take-all competitions, where the benefits of skirting the law and the pitfalls of cooperating with others are more stark.
But aside from the academically-inclined world of central banking -- where for example, the European Central Bank cited “lack of gender balance” as a reason for holding up the confirmation of a new member to its executive board last year -- the idea that banks' financial models might be missing an XX factor has been slow to take hold. And it's not clear, of course, whether Orcel’s embrace of such a concept marks a game-changing moment for gender politics in high finance.
In fact, rather than telling their HR managers to bring them binders full of women to hire, Wall Street CEOs are notable for firing a disproportionate number of their female colleagues whenever major blow-ups are exposed. Following JPMorgan’s “London Whale” scandal last year chief investment officer Ina Drew was the only C-level executive at the firm forced to fall on her sword. Her firing reminded many of how Lehman Brothers threw CFO Erin Callan to the wolves shortly before that firm imploded in 2008.
Even while breaking new ground Wednesday, Orcel made no promises as to how much change he could deliver. “These are industrywide problems,” he said of the reasons for the rate-rigging scandal, adding “I can’t tell you that it won’t happen again.”