Big Bankings' Military Activities

By Ruth Tanner
Source: Tribune
October 30th, 2008
Courtesy Of UK Watch

The Government’s decision to take a controlling stake in some of the largest British financial institutions comes as a new War on Want report reveals how high street banks are complicit in the global arms trade. Our damning report exposes how Britain’s top five high street banks – Barclays, Halifax Bank of Scotland, HSBC, Lloyds TSB and the Royal Bank of Scotland – invest in, provide banking services for and make loans to arms companies. The Government must use its new say in lending behaviour to guarantee standards are put in place to ensure banks end their links with the arms sector.

Faith in the banking sector is already at an all-time low. The revelation that these banks are investing in weapons companies will add to this public mistrust. They are financing an industry that sells arms to countries committing human rights abuses, such as Israel, Colombia and Saudi Arabia. Money from our savings and current accounts is being used to fund companies that produce pernicious weapons such as depleted uranium and cluster bombs.

The arms industry profits from producing the machines that kill, maim and destroy. Britain has exported more than £30 billion in arms in the past five years. It last year had the dubious honour of topping the list of global exporters. With a record £19 billion in orders, Britain is the third largest exporter of arms to developing countries. The United Nations Development Programme has named military expenditure by developing countries as a major barrier to achieving the Millennium Development Goals.

War on Want launches its new report as UN Disarmament Week starts. Using databases which have not been seen before outside financial circles, the report exposes the fact that all five big banks have shareholdings in Britain’s largest arms companies. Four hold shares in all of this country’s leading arms companies. The Royal Bank of Scotland has a stake worth £36.4 million. Halifax Bank of Scotland and HSBC have vast holdings, worth £409.5 million and £483.4 million, respectively. With £717.5 million in shares, Lloyds TSB ranks as the British banking industry’s second largest shareholder. Barclays’ investments in the arms sector total £1.39 billion, the highest total among Britain’s banks. Barclays holds, by far, the largest amount of shares in the global arms sector, with £7.3 billion invested in total.

Both HSBC and Barclays invest in companies that produce cluster munitions and depleted uranium. With the exception of HBOS, all the banks have given loans to at least one cluster munitions producer in the past decade.

Most high street banks are violating their own corporate social responsibility statements. For instance, there is an irreconcilable contradiction between the Royal Bank of Scotland’s stated commitment to human rights and sustainable development and its support for the arms industry.

One bank, HSBC, has gone much further than just producing a corporate social responsibility (CSR) report. Since 2000, it has since stated publicly its commitment to “avoid certain types of business, such as financing weapons manufacture and sales” and to have had that policy “fully in place” for two years.

However, since 2000, there has been no significant downward trend in HSBC lending to the arms sector.

In 2005, there was a major rise in HSBC’s lending.

As a voluntary approach to good practice, CSR cannot make companies accountable for their actions. Government control of banks has given us a perfect opportunity to make them responsible for their behaviour. And we urge account holders to write to their bank, demanding that they stop financing the arms trade and call for transparency on all their investments.

Tagged: Business/Economy Foreign Policy arms trade banking Ruth Tanner Tribune