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Treasury & Capital Markets
Alison Rose, SDG 5 and expanding funding to women
First woman at helm of a UK Big Four bank pivotal moment in UK banking
Keith Mullin 23 Sep 2019

THE appointment of Alison Rose as RBS Group’s chief executive, the first woman to head up one of the UK’s Big Four commercial banks, was rightly lauded as a step forward in the gender stakes, where equality in banking and even more so in the world at large is still, alas, a long way off.

Rose is not the only woman at the helm of a UK bank but she has the most latitude to effect change. In running a major institution, a national champion, Rose occupies a position few other women in the world have managed to reach. Take a look at the executive cadres of the top 75 global banks and that much becomes patently clear.

Not to detract for a second from this potentially pivotal moment in UK banking, but appointing the woman who earlier this year published the self-styled The Alison Rose Review of Female Entrepreneurship at the request of the UK Treasury will be a lost opportunity and be seen as another one-off for a privileged executive earning more than a million pounds a year in one of the richest countries in the world unless Rose moves quickly to execute on her own recommendations.

In truth, the review’s recommendations were, as is typically the way with these things, pretty woolly: a Female Entrepreneurs Code to improve transparency in UK funding allocation, investment vehicles geared to funding female entrepreneurs, support from institutional and private investors, banking products aimed at entrepreneurs with family-care responsibilities, and improving access to training, mentorship and networking.

Nothing wrong with any of it, but radical it ain’t. Nor, I suspect, will it create immediate change for women who still earn less than male colleagues and continue to deal with other forms of workplace discrimination.

Sustainable Development Goal #5 – gender equality – is as aspirational in the developed world as it is in the developing world. Its aim? To end discrimination against women and girls (including all forms of violence and harmful practices), valuing unpaid care and domestic work; promoting equal opportunities for leadership, ensuring access to healthcare and reproductive rights, equal rights to economic resources (including land and property ownership and access to financial services and information and communication technology).

While this is clearly still relevant in developed economies, the issues are much more acute in the developing world, where such aspirations are depressingly seen as some way off. In this context, one of Rose’s recommendations – enlisting the support of institutional investors in particular – struck a chord.

Private wholesale financial and capital markets need to productise and expand access to funding for women entrepreneurship and related fields more fulsomely. The social end of the labelled capital markets has been around for years but growth has been much slower than environmental issuance, which in itself is still no more than 3%-4% of annual bond new-issue volumes.

The US$220 million in Women Entrepreneurs Bonds about to be issued by Thailand’s MUFG-owned Bank of Ayudhya to Germany’s Development Finance Agency DEG and the International Finance Corp (IFC) to create a lending facility to women-led SMEs (WSMEs) in Thailand is noteworthy but such issuance is episodic. The Thai bond is supported by the Women Entrepreneurs Opportunity Facility, a joint facility of the IFC and Goldman Sachs (GS) 10,000 Women.

The finance gap for WSMEs in Thailand alone is estimated to be US$25 billion, equivalent to 61% of the country’s overall micro and SME finance gap.

There have been far too few social bonds. The Thai bond is being marketed as the first private-sector gender bond in Asia-Pacific and the first social bond in Asia emerging market (EM) compliant with the International Capital Market Association’s Social Bond Principles and Asean’s Social Bond Standards, for example. (A technically correct but somewhat nuanced claim since the National Australia Bank has issued a AUD500 million Gender Equality Bond in March 2017, just prior to the publication of ICMA's inaugural Social Bond Principles but under its predecessor Guidance for Issuers of Social Bonds)  

There has been a smattering of social issuance in Europe, while the US$260 million three-year senior unsecured social bonds sold recently by Bayport Management, the global micro-financial services provider, and the 3 billion yen private placement (roughly US$27 million) sold by Chilean credit union Coopeuch (Latin America’s largest), into the Japanese market were EM examples.

The capital markets need to channel more institutional money to tackle gender issues. Even to the extent such bonds emerge, they tend to be the domain of supranational and development finance agencies.

WSME loans should be promoted as a global asset class in their own right. The impacts could be significant: in announcing the Thai bond, Cristina Shapiro, director of 10,000 Women, quoted GS research that showed that closing the credit gap for women-owned SMEs in emerging markets could push per capita income up by an average of 12% by 2030.

More needs to be done to channel institutional and private investor interest into gender-specific investments. US investment advisor Cornerstone Capital recently offered up some thoughts about gender-lens investing using its Access Impact Framework to support SDG 5. “A conscious focus on improving access to products and services that benefit women and girls creates economic benefits extending to families and entire communities and can fuel economic growth more broadly,” the firm notes in a recent research piece.

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