Italian Banks Weighed Down by Overpaid Directors

Bank boards in Italy are among the most extravagant anywhere. On a visit to Rome a year ago, Mario Draghi, the European Central Bank chairman, put his finger on the issue, noting that consolidation in the Italian banking sector was necessary because “until very recently, Italy had 750 banks each with its own board of directors”. It is not just a matter of scale but size. Of the banks listed on the Milan stock exchange, it is difficult to find one with less than 15 board members. Banco Popolare has 24 board members. Banca Popolare dell’ Emilia Romagna has 18. Intesa Sanpaolo is shortly to move to a single board but has long had a dual board system with 28 directors. UBI Banca has 23 people on its supervisory board and another nine on its management committee They lack diversity, too. An analysis of Italy’s banking boards, published 18 months ago by GC Governance Consulting, found women accounted for just 16 per cent of board seats on average — and as little as 4 per cent at Banco Popolare. International executives accounted for just 7 per cent. Of the 17 listed banks analysed, 13 had no foreigners on their boards. For those who do have a seat, however, the pay is outlandish. According to the study, the average pay for board members, including chief executives, was €850,000. (FT)