Study finds half of KBW Bank Index CEOs are older than 65

A Truist Securities report published on Monday found that half of chief executives at banks in the KBW Bank Index were older than 65, up from fewer than 20 percent two decades earlier.

AGE PROFILE SHIFT

The Truist Securities researchers reported the findings in a briefing that examined executive demographics and their implications for bank culture and dealmaking. The note contrasted the current age profile with the picture from roughly 20 years earlier, and pointed to a substantial rise in the share of very senior executives leading banks.

The median age of bank CEOs has risen by 10 years since the early 2000s, in line with corporate America overall, according to a working paper published in April; Truist Securities Managing Director John McDonald, who wrote the report with Peter Nicolo and John Manahan, said bank CEOs "tend to be older on average".

Financial-sector CEOs have some of the longest tenures of any sector, at nine years, against 5.4 years in energy and six in consumer, according to CristKolder Associates. The Truist note linked the demographic change to potential effects on workforce culture and on strategic choices, including mergers and acquisitions.

ADVANTAGES AND DRAWBACKS

The Truist researchers said older CEOs bring advantages, including leadership continuity that can foster consistent strategy, a culture that remains intact and aids talent retention and recruitment, and experience managing risk across cycles. The drawbacks, they wrote, include the risk that promising executives leave when a CEO stays on, and that strategy and culture "may become stale over time without continual incorporation of fresh perspectives and challenge from new ideas".

On deals, the note found that, despite a common investor screen, CEO age was a poor predictor of mergers and acquisitions, and that over the past 20 years banks that were sold had tended to have comparatively younger CEOs.

McDonald also noted there is little to no correlation between bank CEO tenure and relative share price performance over time.

Sources: Banking Dive