Lloyds Bank revealed on Friday that black employees are paid a fifth less than their white colleagues on average.

The median pay gap for black staff in 2020 was 19.7%, while the gap for all BAME employees was 14.8%.

The bank said in its ethnicity pay gap report that the discrepancy stemmed from black staff being “disproportionately under-represented at senior levels” rather than from unequal pay being issued to employees of different ethnicities within the same role.

In July, Lloyds set a target to increase the number of black employees in senior roles from 0.6% to 3% by 2025, coinciding with an existing target of 8% BAME senior staff by the end of 2020 as part of its company-wide “Race Action Plan”. The bank also said that it had launched a Black Business Advisory Committee, to be headed by former Cabinet Office adviser Claudine Reid, to investigate growth barriers faced by black-led businesses.

"We want to be clear that we are an anti-racist organisation,” said Lloyds CEO António Horta-Osório, “one where all colleagues speak up, challenge, and act to take an active stance against racism.

"In doing so, our colleagues will help break down the barriers preventing people from meeting their full potential."

Professor Binna Kandola, business psychologist and co-founder of Pearn Kandola, criticised the bank’s striking pay gap and its disparity in roles by ethnicity. "Considering that the majority of senior roles are filled by white people, this would suggest that white staff are given preferential treatment and are able to climb the ladder more quickly,” he said.

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"While the best organisations will try to be more systematic in assessing and evaluating performance, bias still penetrates these processes. Rarely are organisations willing to confront the fact that the problem is the people operating the processes. None of us are as objective as we believe we are, and none of us want to believe that we make judgements about people based on their ethnicity. As a consequence, minorities are more likely to be found in roles which have fewer opportunities for progression and which ultimately pay less.

"To solve the problem of the race pay gap, we must address the lack of opportunity for BAME people to advance to more senior positions. Performance evaluations, career development and line manager support are all crucial ingredients, and the people operating these systems must receive the training and support required to conduct these processes with career and accuracy."