what is the diversity and inclusion in the Canadian banks. what are the economic benefits realized by the banks to promote diversity and inclusion?

BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 1
Banks, Diversity and Profit of Shareholders
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 2
Table of Content
Introduction...................................................................................................................3
Literature review...........................................................................................................4
General overview about the diversity and inclusion.....................................................4
Decision making and benefits to shareholders..............................................................6
Economic values created by Canadian banks to shareholders......................................7
Banks initiatives and benefits to shareholders..............................................................16
Trends and benefits that support the diversity and inclusion .......................................21
Comparison of Canadian banks with other countries banks.........................................22
Comparison of global banks to gain understanding about diversity practices..............23
Trends about diversity on global basis..........................................................................26
North America analysis.................................................................................................27
Reasons for the diversity promotion in Canada to gain economic benefits..................28
Shareholders hostility towards women and economic contribution of women............32
The drivers of promotion of diversity and inclusion at work place..............................35
Benefits of diversity......................................................................................................40
Business cases...............................................................................................................43
Evidences that diversity promotes the economic benefits............................................44
Regulation role in promoting the diversity...................................................................44
Technology role in promoting the business of banks....................................................45
Analysis of five banks to show the other factors that promote the shareholders value than
diversity.........................................................................................................................45
Viewpoints of Royal bank of Canada about diversity...................................................52
Cognizant report about banking industry of Canada.....................................................55
Discussion.....................................................................................................................56
Conclusion....................................................................................................................64
Recommendations.........................................................................................................65
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 3
Introduction
The report aims to offer the detailed analysis of diversity and inclusion in Canadian banking
sector to establish the link between diversity and inclusion initiatives and economic value to
shareholders of companies. This report covers the reports from the government and private
institutions about the diversity and inclusion initiatives. Report has illustrated about the top
bank initiatives for diversity and inclusion and the economic benefits realized by these banks.
Women diversity, gender diversity, cultural diversity and other types of diversity are
analyzed in perspective of Canada banking industry, at national and international levels.
Women diversity in particular explored in detail to understand the economic benefits realized
by promoting women diversity. The banks such as Royal bank of Canada, CIBC, BMO,
BNS, National bank, B2B bank, and other banks are mentioned with their economic benefits
and their diversity and inclusion initiatives. Trends and business drivers that promote
diversity and inclusion are illustrated in details. Canadian banks are compared with other
countries banks and global banks. The reasons are offered that promote the diversity and
inclusion in Canada in general to understand why banking industry promotes diversity and
inclusion. All the banks that are analyzed are profitable from several years and providing
good return to shareholders, so this analysis turns to analyze the broader causes for
development of banks. It considers the other factors such as government regulations and
technology role to promote the business. It analyses the strategic initiatives and strategies of
six top banks to understand apart from diversity and inclusion how these banks have become
profitable. It considers the government regulations and government role to guide the banking
industry. The report consists of discussion and conclusion part at the end. In the discussion
part, report compares the findings and tries to react at fair conclusion about the topic whether
diversity and inclusion have provided economic value to the shareholders and are there other
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 4
factors responsible for share holder value enhancement apart from diversity and inclusion.
The report concludes with recommendations to Canadian banking industry.
Literature reviews
General overview about the diversity and inclusion
In this section the general overview is presented about the diversity and inclusion to
establish a link between the diversity and inclusion and economic values for shareholders in
coming section. It is identified that there are more than a quarter of million people of Canada
are bank employees. These banks and their subsidiaries create valuable job creation and
contribute significantly to the Canada’s labor market. There are many banks practicing
leading human resource policies and practices. It is observed that banks are actively
promoting the diversity and inclusion approach in their work force. They proactively support
and promote the strategy of diversity and inclusion. They recruit young Canadians and
promote young employment. The banks of Canada are offering youth employment with
programs such as internship, entrepreneurial programs, scholarship, educational co-op and
stay in school program. Banking companies are increasing the numbers of older bank
employees as well as assisting them to find jobs within the industry (Canadian banking
association, n.d.). Many banks assist special efforts to immigrants so that they can adjust and
find job in Canada. There are some banks that have dedicated staff. There are other banks that
work with outside organization. Banks have focused to help newcomers and to assist them to
obtain a job within the industry.
It is identified that banks are among the first companies that have grasped the
significance of Canada employment equity act for demographic and labor market (Canadian
banking association, n.d.). They have quickly adopted the diversity initiatives to build the
representative work forces and they were first to describe the business case for diversity and
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 5
equity at work. The law of Canada requires that federal regulated employees should collect
data about women, visible minorities, people with disabilities and aboriginal people.
The women are important part of diversity program and they provide economic value.
To show that shareholders benefits can be enhanced with the women diversity it is taken in to
account. According to the report of 2014, women constitute 62.0 percent of the total work
force at six largest banks of Canada and it is more than any other sector regulated federally
(Canadian banking association, n.d.). There were 34.5 percent of position of senior
management was occupied by the women. There was 50.4 percent of middle management
positions were occupied by women. These reports had exceeded the benchmark set by
government to promote diversity. In total, there were 50.5 percent of all professional jobs
were held by women in banks in 2014 (Canadian banking association, n.d.).
The visible minorities’ representation also supports the economic value of
shareholders. Visible minorities’ representation reached to 29.6 percent in the year of 2014.
There were 12.1 percent of senior management positions occupied by visible minorities’
people. There were 26.1 percent of middle management jobs held by the visible minorities.
33.3 percent of all professional positions were occupied by visible minorities’ people. All
these numbers have exceeded representation of visible minorities in federal public sector and
federally regulated industries (Canadian banking association, n.d.).
Fair representation of disable people is significant to show diversity benefits as it
spread the better image of organization that assists in creating more economic value for
shareholders. Representation of people having disabilities in six large banks of Canada has
increased to 4.1 percent in the year of 2014. Banks are consistently trying to reach to the
benchmark of 4.9 percent (Canadian banking association, n.d.).
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 6
In 2014, 2729 aboriginal people were employed in six banks. This group of people is
also specially focused by the banks to increase their representation (Canadian bankers
association, n.d.).
Now the focus moves to economic contribution made by Canadian banks to economy
that shows the valuable return to share holders as well.
It is found that over 280000 Canadians are employed by banks in all over Canada.
The salaries of 24.1 billion dollars are paid to the salaries and benefits to employees in
Canada. Six largest banks had paid 8.5 dollars in taxes in 2014 to all levels of government.
Profitable banks of Canada have provided 14.8 billion dollars in dividend income to many
Canadians in 2014. Banking industry contributes to 3.3 percent of gross domestic product of
Canada.
These factors show that Canada banking industry provides many benefits to
shareholders.
Decision making and benefits to shareholders
Before answering the question of Canadian banks outcomes for the shareholders
value, it is imperative to understand that how promoting diversity can assist in decision
making that ultimately profits to shareholders. It is widely accepted fact that board of
directors’ compositions can play an important role for corporate performance determination
(Hermalin & Wiesbach, 2003). There are numbers of appointment made by the board to
increase the diversity where wider ranges of educational, demographic and social
backgrounds of people are considered for providing employment opportunity in board. After
the wake of financial crisis, it became evident that obligation of bank boards to control and
monitor the managerial risk taking is increased and has come under the public scrutiny. There
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 7
are previous works that shows the implications of board diversity and the general effects of
diversity over the profitability (Erhardt et al., 2003: Sharder et al., 1997) over the operating
efficiency (Siciliano, 1996). The case of diversity in boardroom depends upon ethical and
economic arguments (Van der Walt & Ingley, 2003). Ethical argument assumes that it should
be inequitable to exclude certain people from board of directors on the basis of race, gender,
or other non- performance related features (Singh et al., 2001). It is identified that promotion
of board directors can empower the different constituents of society that are historically
excluded from position of power (Keasey et al, 1997). So promoting the board diversity is
related with promotion of equal representation that is ideal outcome in society (Brammer et
al., 2007). It is identified that diverse board can create legitimacy and can improve a
bargaining power against its various stakeholders (Carter et al., 2007). As far as the board
diversity is concerned with creation of economic value, it is revealed that its enhances the
functional abilities of board and board can engage in strategic decision making, complex
problem solving and monitoring of management (Forbes & Milliken, 1999). Diverse boards
can be considered to promote the knowledge base assets that in turn create economic value to
the shareholders by linking organization to its external environment (Pfefer & Salancik,
1978). Due to board members experiences and values, they bring valuable economic
resources to organization that assists them to comprehend the dynamic industry context
(Hambrick & Mason, 1984). The board members are significant to provide guidance to
organization and their diverse background importance shows that it can contribute to enhance
the economic value to the shareholders.
Economic values created by Canadian banks to shareholders
This section present the economic value created by Canadian banks to shareholders to
establish the link of diversity and inclusion with the shareholders profits. This section shows
that Canadian banks have provided very good returns to the shareholders. Canadian banks
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 8
play a prominent role in the economy of Canada. They have a key role to play here. The
banking industry has 14 domestic banks, 20 foreign banks and 33 foreign banks subsidiaries.
These institutions total managed over 1.7 trillion in assets. The banks account for over 70
percent of total assets of the financial service sector of Canada. There are six largest domestic
banks that account for over 90 percent of the assets of the banking industry. They are the
leading employers and there were 235000 Canadians who had a job in banking industry. On
the Canadian payroll, there were approximately 16.1 billion people employed. The six major
banks had a significant presence outside the Canada as well. Canadians banks are good
performers and provide great economic values for a long time and this is understood by the
chart
At that time the average rate of return was 15.2 percent in 2001but it was a healthy return.
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 9
The contribution of the non –interest income to revenues had grown in the past and non
interest income had accounted for over 50 percent of gross revenue at that time.
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 10
The net income had a growth in 2001.
The Canadians banks offered flat fee packages to the customers that tailor made and
presented considerable cost saving.
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 11
The international monetary fund report indicated that the regulatory and supervisory
structure of Canada was well developed at that time and followed major international
standards and principles. The world economic forums of global competitive report for the
period of 2001-2002 ranked the banks of Canada as the soundest financial institutions in the
world. (“Canada's Banks”, n.d.).
The analysis reveals that Canada banks are offering very good margin of benefits to
shareholders.
Next section also aims to identify the link between the diversity and economic value
creation for shareholders. So first the economic benefits that are offered by main banks of
Canada are illustrated to understand the impact of diversity. Coming paragraph provides the
customers positive faith towards the banks of Canada that is essential for any business to
provide good returns to shareholders. As far as the Canadians banks are concerned they are
well accepted by Canadians. Canadians are proud of their banking industry and recent poll
found that 84 percent of Canadians have favorable views regarding Canadians banks and this
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 12
number has increased remarkably by 20 percent in recent years. There are eighty seven
percent of Canadian people that give bank a better performance rating to banks for being
secure and stable.80 percent of Canadians offer bank good and excellent rating for protecting
the privacy of the personal information and transaction. There are 75 percent of people that
agree that banks are good to introduce new technologies that have improved the convenience
of banking.
There are fifty nine percent of Canadians that say that more being profitable banks
means creation of more jobs, healthier economy and providing the better pension plan
returns. (“Banks revenues and profits”, n.d.).
It is revealed that Canadian banks have provided very good return on investment to
shareholders. In comparison with the US banks Canadian banks have provided 16.8 percent
of ROE. The U.S. banks have offered only 7.0 ROE. In comparison of Australian banks,
Canadian banks have provided more returns on investment. It is observed that Canada big six
banks have provided 20.5 billion in 2014 that was up from CA$ 18.9 billion. It is also
revealed that banks efficiency have increased to 57.9 percent in 2014 from 57.7 percent from
2013.
If the BMO (Bank of Montreal) return on equity is measured it shows the return of 14
percent in 2014. It was fallen from 2013 but still had a good return on equity (PWC, 2015).
The annual share offered 3.08 dollars per share in 2014 and it was up 4.76 percent from the
2.94 dollars per share in 2013. The company Basel III common equity tier ratio improved to
10.1 percent from 9.9 percent in 2013. BMO has acquired the F&C asset management plc for
expansion. The net income was up to 11.1 percent. The revenues were up to 107 million
dollars or increase of 7 percent. The loan growth is increased by 8 percent and deposit growth
increased by 7 percent.
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 13
The analysis is clearly reflecting that BMO offers very good return to shareholders. In
coming sections, BMO initiatives for diversity and inclusion is also described to prove that
bank initiatives for promoting the diversity and inclusion actually results in better profit
margin for shareholders.
Scotia Bank is the third largest bank by market capitalization and total assets. The net
income was 7298 in 2014 in comparison with a net income of 6,610 million in 2013. The
annual dividends were up by 2.56 percent in 2014 from 2013. The diluted earnings per share
were 5.66 dollars in 2014 and high than 5.11 dollars in 2013. The annual dividends were U.S.
2.56 dollars in 2014. The return on equity was 16.1 percent in 2014 in comparison with 16.6
percent in 2013(PWC, 2015).
This bank also practices diversity and inclusion program and its hefty performance
shows that diversity and inclusion is in fact a catalyst for the shareholders economic value
creation.
The report shows that CIBC income has increased as well as its revenue. The return
on equity was 18.3 percent, the dividend paid to the shareholders was 3.94 dollar per share
and it was up from 3.80 dollar per share in 2013. The dividend payout ratio also had an
increase and it was 46.8 percent in 2013 but increase to 50 percent in 2014. The retail and
banking business of CIBC was also increased. Revenue increased to 8.3 billion in 2013
(PWC, 2015). There was an overall increase of 2.5 percent in 2014. The wealth management
business had seen increase in revenue and it was an increase of 22 percent. This was due to
increases in wealth management revenue, retail brokerage revenue and asset management
revenue. There was 125 percent increase in private wealth management and this was due to
the acquisition of Atlantic Trust that was acquired on December, 31, 2013. The net income
was increased by 22 percent. The wholesale business had seen the increase of 28 percent. The
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 14
revenue in wholesale business banking was increased by 8 percent since 2013. The wealth
management segment has showed increase of 37 percent in net income. Total revenue for this
segment reflected in increase of 16 percent from 2013. There was a 6 percent increase in
personal and commercial segment. Total revenue in personal and commercial segment has
increased by 4 percent. In the financial market segments, there was increase of 13 percent in
net income from the year of 2013 (PWC, 2015). The key source of bank success in revenue
growth is accounted to strong presence in Quebec. Bank has considered that for acceleration
and support of long term growth, there is a need to focus on diversification that includes
targeting new niches across the country. On international level, bank has an intention to
pursue the strategy of targeting the specific niches.
The bank analysis reveals that there is a positive relation between diversity inclusion
and shareholders economic value promotion. Apart from that different strategies employed by
bank to remain competitive show that apart from diversity and inclusion program, there are
other factors as well that enhances the economic value of shareholders.
The NBC had seen increase of 1.7 percent in net income. The diluted earnings per
share were increased to 4.32 for 2014. The return on equity was decreased from 20.1 percent
to 17.7 percent from 2013 to 2014.
The RBC highlights shows that because of strong operation, return on equity was 19
percent in the year of 2014 for shareholders and bank had beaten the desired 18 percent of
benchmark. The diluted earnings per share were 9 percent in 2014 that had surpassed the 7
percent benchmark. The dividend payout ratio reached to 47 percent and met the benchmark
set by bank that was 40-50 percent. The dividend growth was 12.3 percent. The personal and
commercial banking had delivered strong results and the net income was increased 2 percent
in 2014 (PWC, 2015). The net income increased 5 percent in the year of 2014 because of
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 15
business loans and personal loans growth, residential mortgage growth. The average deposits
had increased 6 percent. The wealth management had seen the growth in its business and
client assets was surpassed 1.1 trillion. Net income was increased 22 percent. The capital
market has maintained its market leadership position in country. There was a net income
increase of 21 percent in 2014. The corporate and investment banking net income had grown
by 14 percent. The global markets net income grew by 13 percent. The provisions for credit
losses had decreased 77 percent. The insurance segment rebounded in 2014 and the net
income had increased 31 percent in 2014. The net income in insurance was increased 10
percent. Investor and treasury service net income was increased 30 percent in 2014.
RBC bank is a leading bank of Canada and active supporter of diversity and inclusion
at work place. Its robust performance on economic front shows that diversity and inclusion is
in fact accelerates the economic benefits to shareholders.
The TD bank highlights show that net income was increased 18.7 percent in 2014.
The strong operations had provided a return on common equity to 15.9 percent in 2014 that
was high from 15.3 percent in 2013 (PWC, 2015). The adjusted diluted earnings per share
were grown to 15.1 percent in 2014. The cash dividends paid was up 14 percent in 2014 from
2013 (PWC, 2015).
the analysis reveals that BMO had provided 16.8 percent of market return, BNS
provided 12.9 percent of market return, CIBC provided 20.4 percent of market return, NBC
provided 20.6 percent of market return, RBC provided 18.3 percent of market return and TD
provided 19.8 percent of market return in the year of 2014 (PWC, 2015).
This analysis reveals that these top banks of Canada perform very well in terms of
offering economic value to shareholders. So it presents a picture of banking industry of
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 16
Canada about how the bank industry provides good returns to shareholders. The initiatives of
different banks for diversity and inclusion are illustrated in coming section to show the
positive link between diversity and inclusion and increased return to shareholders.
Banks initiatives and benefits to shareholders
In this section banks diversity and inclusion initiatives and profits to shareholders are
illustrated to understand the implications of diversity and inclusion initiatives over the profits
to shareholders.
B2B
It is identified that B2B bank is recognized as the six companies that has received
ACCES employment walk of fame award for promoting the diversity and inclusion. There
were 40 employers were nominated for the prestigious award but B2B bank had won this
award. The ACCES is offered to the employers who have shown to play a key role for hiring
new Canadians, volunteered as mentors to promote diversity, offered expertise and time to
job seekers, promoted new ways to ensure Canadians achieve their employment goals.
All these criteria’s have been fulfilled by the B2B bank. B2B bank is the Schedule I
bank and it is a leading provider of banking products to more than 27000 brokers and
financial advisors in Canada (Tardiff, 2013)
It is revealed that B2B bank that is a part of Laurentian bank has achieved remarkable
success in promoting the shareholders values and in 2015; its mortgage and business loan
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 17
portfolio has been increased by 34 percent and 18 percent respectively (“Our History”, n.d.).
These findings suggest that B2B bank while following the diversity and inclusion plan has
promoted the shareholders value and offered them much profit. It is also identified that B2B
bank is providing the benefits to shareholders continuously. In 2014 B2B bank was ranked
among the city of Montreal top employers competitors that show that it is city 25 companies
that offer work opportunities (“Our History”, n.d.). B2B bank size has been double after the
integration of AGF trust and MRS companies. This also proves that B2B is offering valuable
services to shareholders. In 2013, Laurentian bank has surpassed the $150million mark for
first time in adjusted net income (“Our History”, n.d.). This achievement confirms that
organization provides valuable return to the shareholders.
Bank of Montreal
Bank of Montreal is assessed for its diversity and inclusion program. According to
BMO, it is dedicated to create a diverse workforce that consists of people from different
backgrounds. It recognizes the experience n unique talent of the employees to promote the
diversity and inclusion. According to its objective it creates n equal opportunity for the
workforce and makes it clear for all stakeholders that diversity and inclusion is an important
point for the company. The vision and values of the organization shows that diversity is the
core corporate value for the organization and the values of diversity and inclusion assists
company to pursue its vision. In 2011 company has renewed its diversity policy and for that it
has created cross enterprise diversity renewal council. This council is responsible for
increasing the diversity across the organization. The councils put efforts to make company as
a leader in diversity and fostering a culture so that employees can have an opportunity to
convert their potential in to performance. The key priorities set by the organization are to
develop the diversity action plan, continue to integrate the diversity to deepen the talent
management, to enhance the ability to recruit new talents, to build the cultural intelligence
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 18
and to showcase the success stories. The future goals of the organization are to increase the
women percentage in senior leaders’ position to 40 percent that is currently 37 percent by the
end of 2016, to increase the numbers of minorities and aboriginal people employment at all
levels and to hire more people with disabilities to reflect the communities (“Diversity and
Inclusion, n.d.).
BMO financial group has been awarded as the best diversity employer by Mediacorp
Canada Inc. for 2015 (“BMO Financial Group Named One of Canada's Best Diversity
Employers for 2015”, n.d.).
. This findings show that BMO is a leading organization promoting diversity and
inclusion. The report presents the program “count me in” that considers the people with
disability for employment. there are learning sessions and workshops organized by the
organization to promote understanding of diversity, and to understand the hidden biases as
well as to formulate plans for establishment of more diverse and welcoming work
environment (“BMO Financial Group Named One of Canada's Best Diversity Employers for
2015”, n.d.).
There is enterprise wide pilot sponsorship program so that high potential employees
having diverse backgrounds can be connected with the senior leaders. There is ACCES
mentoring session sponsorship by organization to provide new Canadian job seekers
opportunities for employment. There is scholarship and summer internship programs offered
by the organization for students come from Canada’s aboriginal community. There are
multiple initiatives taken for supporting women diversity promotion such as catalyst accord
so that representation of women can be increased (“BMO Financial Group Named One of
Canada's Best Diversity Employers for 2015”, n.d.).
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 19
According to 2014 report, the total shareholder return was 17.1 percent. BMO has
delivered record net income of 4.3 billion dollars and on an adjusted basis, net income
increased to 4.5 billion dollars (“BMO Financial Group 197th Annual Report 2014”. n.d.).
These findings suggest that BMO has increased the return to shareholders while
practicing the diversity and inclusion practices for community.
National bank of Canada
National bank is ranked one to the top Canada’s best diversity employers by
Mediacorp Canada Inc. and it is for the sixth consecutive year. There are some 60 cultural
communities represented at National bank. There are numerous activities that highlight the
backgrounds of different people in organization. Bank each year promoted the initiatives to
celebrate the LGBT community vibrancy. Bank is committed to promote the advancement of
women at the workplace. Due to this there are a higher percentage of women in the bank. For
reaching it diversity objective, bank has partnered with the several diversity advocacy groups.
Many awards are offered to the bank for being an outstanding employer (Deshaies, 2016).
The economic value for shareholders is also analyzed. It has revealed that the net
income was 210 million dollars for the quarter 2 of the year of 2016 against 404 million
dollars for quarter 2, 2015. Though the net income is diluted but there are many other reasons
than diversity and inclusion practices. Company has been enjoying stellar performance. The
net income and revenue was increased 6 percent and 4 percent in 2014. The net income was
increased up 14 percent and revenues had increased up 11 percent (National bank, n.d.).
The above information shows that National Bank is consistently offering economic
values to the shareholders. The objectives of RBC include being recognized leaders in work
force diversity, to achieve the preferences from the diverse clients and to leverage diversity
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 20
for growth of company. Company has focused to set priorities such as promoting the talent
and representation of women and minorities in leadership, offering customized services to
diverse client markets and to support economic and social development of communities.
Royal bank Canada
RBC has taken strong initiatives for promotion of diversity and inclusion. It is
revealed that RBC is the top asset manager and has reach to high net worth clients. Company
has efficiency rate of 53 % (McKay, 2016). Company has increased its share of high net
worth market by 20 percent (McKay, 2016). Company has doubled the private client
business since 2010. In capital market company has maintained the leading position in
Canada and it was names as the best investment bank in Canada for eight straight years
(McKay, 2016).
Nova Scotia bank
As an international bank. This bank is a leader in terms of inclusion because it has
employees from over 120 countries, speak more than 100 languages and serve more than 23
million customers globally. It has also provided good returns to all shareholders.
Bridge water Bank
This bank also supports the diversity and inclusion program and offers employment
opportunities to all. It provides an equal opportunity to all that supports the diversity and
inclusion. It can be assumed that since bank industry of Canada is soundest one in the world
this bank also pas heftily to its shareholders.
Business development bank of Canada
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 21
It is awarded as the Canada’s best diversity employers in 2016. The reasons are
mentioned. BDC provides aboriginal summer student internship program, offers work
experience and mentoring to near about 20 college and university students every year. Bank
has developed a BDC E-spirit that a 16 week web based competition for community of
aboriginal people and aboriginal high school students participate in learning the interactive
business planning resources, have online access to mentoring, and extensive student
networking opportunities that is provided in person and online. BDC has launched the
entrepreneurship connection with ACCES Employment that a 4 week program to help new
comers to expand their network and to start their own business. There are numbers of affinity
groups maintained by BDC and these affinity groups work with BDC national committee to
plan about awareness sessions and events and about meetings with associations and local
organization. The females employees in the organization are 49 percent, female managers are
34.8 percent. Visible minority employer is 16.8 percent, visible minority managers are 6.4
percent, aboriginal employees are 1.7 percent and aboriginal managers are 1.7 percent.
The finance performance of BDC shows that it has exceeded the targets. The target
was 6500 but the actual was achieved 8010 in the area of small loans. For financing new
business. Target was set 1400 but company achieved 1519 in financing new business. The
reach to entrepreneurs across Canada through partnership target was 2000 in 2014 but it was
increased to 2252. The consolidated net income was 432.6 million in 2014 (“BDC
entrepreneur’s first Annual report 2014”, n.d.).
The findings show that BDC has provided economic benefits to the shareholders
while following the diversity and inclusion plan.
Trends and benefits that support the diversity and inclusion
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 22
The trends and benefits of diversity are important to link the diversity and inclusion
initiatives with the benefits of shareholders. The previous analysis reveals that banks have
provided the economic benefits and fostered the diversity and inclusion program as well.
Now in this section, the report explores various facts that show the relevancy of diversity and
inclusions for shareholders interest promotion. It compares the Canadian banks with the
performance of other countries banks and global banks to show that how the Canadians banks
are better in providing ROE.
Comparison of Canadian banks with other countries banks
It is significant to compare the performance of Canadian banks with other banks
located in other countries to better link the economic value creation by the Canadian bank to
shareholders. There are six banks that comprise over 90 percent of the assets of banking
sector of Canada. These banks are royal bank, Canadian imperial bank of commerce, bank of
Montreal, TD bank financial group, bank of Nova Scotia and national bank. It is identified
that an efficient and productive financial system is mandatory for the long term growth of the
economy. In this regard, the Canada US comparison is performed. There are major Canadian
banks that are compared. It is revealed that expense ratio is lower for the Canadian bank in
the late 1980 and early 1990 but this measure has been increased and it can be attributed to
higher labor cost component. The labor productivity ratio of Canadian banks is significantly
higher than the USA banks. Initially the Canadian banks are less productive than the USA
banks but later both Canadian and USA banks have similar productivity. The conclusion
drawn from this analysis reveals that average Canadian banks employees are able to produce
more assets than the U.S bank employees and in terms of production of net operating
revenues both Canadian and U.S. banks are similarly productive. The larger economies of
scale are obtained in the cost functions of Canadian banks. It is also found that legislative and
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 23
regulatory changes have offers various benefits to the Canadian financial services (Allen,
Engert, Liu, 2012).
Canada has fewer banks than USA and it did not suffer the negative repercussions of
USA financial system. The Canadian banks are regarded as the safest and most stable banks
in the world and have avoided the bailout. It has enjoyed a faster recovery. One of reason is
the fewer banks Canada is having is due to regulatory impact. Canadian banks are found
more ethical in their approaches and there is strong regulatory presence that caused Canadian
banks to avoid financial crunches. This confers one aspect also that these Canadian banks are
bound by law and they promote the diversity and inclusion program as well.
Comparison of global banks to gain understanding about diversity practices
The comparison of global banks with Canadian banks show about the role of diversity
and inclusion and other strategies to make the banks successful to deliver shareholders value.
The comparison and analysis of 20 global banks suggest that diversity and inclusion program
is actively promoted by the global banks. The banks that are studied are Banco Santander,
Bank of America, Barclays PLC, Bayerische Landesbank, (BayernLB), BNP Paribas,
Citigroup Inc, Commerzbank AG, Credit Agricole Group, Credit Suisse Group, Deutsche
Bank, DZ Bank Group, Goldman Sachs Group, HSBC Holdings, JP Morgan Chase & Co,
KfW Group, Landensbank Baden –Wurttemberg, Lloyds Banking Group, Morgan Stanley,
Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Standard Chartered Plc,
Toronto- Dominion Bank, UBS Group AG, and Wells Fargo.
It is revealed that there are vast majority of banks actively managing and reporting the
staff and board diversity. But there are notable gaps between the best and weak performers. It
is evident that banks are now taking active steps to promote the diversity across all senior
BANKS, DIVERSITY AND PROFIT OF SHAREHOLDERS 24
level. It is identified that two third of the top banks are including the metrics on the diversity
of their workforces. But there are one fifth of global banks do not mention the diversity at all.
There is only over half of bank companies out of 20 banks that reported about the proportion
of the women at the senior level that suggests that there is still more work to be done in this
front for diversity mapping. It is also revealed that all of European banks involved in survey
have reported about the diversity but just over half of American and Canadian banks have
reported about the diversity. There are ninety one percent of European banks that measured
the diversity but only 33 percent of North American banks have measured diversity. It is also
revealed that US or Canada banks have not included the diversity targets...