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Banks and arms


The arms industry: an ethical minefield

Several reports have confirmed that banks are heavily involved in the arms industry. With growing military budgets around the world, the arms industry offers interesting investment opportunities. It seems that financial institutions are blindly investing in any project or company offering lucrative prospects. Nonetheless, it is common that the industry operates in clear breach of arms embargoes and arms export control, in turn fuelling numerous conflicts and providing support to oppressive regimes.

Arms trading fosters wars, conflicts, murders and human rights violations around the globe. When it comes to the role and responsibilities of the financial sector, the grave implications of arms trading should taken into account. Among the most serious are:

  • Corruption: nearly 50% of the bribes paid worldwide are considered to be linked to the arms trade.
  • Unproductive expenditures: several countries in the world, namely some of the poorest, spend more on arms than on health care and education combined.
  • External debt: for many indebted countries, a substancial part of the external debt is linked to arms trade.

The financing of arms has direct consequences for people living in many countries, including the violation of their fundamental rights. Moreover, the defence industry is known for its lack of transparency and low sustainability standards. The arms trade is also often linked to other murky operations from the financial sector, like the extensive use of tax heavens. Consequently, any financial institution providing financial services to the defence sector takes serious risks of becoming involved in dubious transactions.

Investments in the arms industry fuel armed conflict and can never be sustainable. BankTrack and its member organisations urge all banks to disinvest from arms producers and to provide full transparency on transactions and clients.

BankTrack scored the bank policies of 49 internationally operating banks in its Close the Gap research. One of the sector this study covers, is the military industry. Please have a look at these pages to learn about bank's arm policies.

Banks disarm

Some financial institutions have, under the pressure of campaigns and new legislation, severed their investment relationships concerning weapons producers. The extent to which they exclude arms producers differs greatly, but the general trend is the realisation this topic can no longer be avoided. Some reactionary banks only bring their investment policies in line with new legislation - e.g. by no longer investing in landmine producers - but only applying this policy to a limited number of financial products. Others banks apply improved arms policies to all services and include other weapons like cluster munitions, weapons with depleted uranium, and nuclear arms. Several Italian banks have taken the positive step deciding to no longer finance international arms transactions.

It is not just banks, but also institutional investors, who are fronting up to their responsibility. After a revealing documentary about their investments, several Dutch pension funds have decided to no longer invest in cluster munitions producers. The Norwegian Government Pension Fund also excludes these weapons producers.

Legal initiatives against investments in the arms industry

Research into the investment in the weapons industry reveals that self regulation by the financial sector leads to patchy results. As a result, stemming the capital flow towards the arms industry needs stronger international regulation and widespread national legislation. A government simply cannot allow investments by its resident financial institutions that are in opposition to its principles or policies. During the last years there have been signs that some politicians have taken up this challenge.

In February 2007 after years of campaigning by Netwerk Vlaanderen, the Belgian Parliament voted a law forbidding any investment in cluster munition producers by Belgian financial institutions. The law states “Financing a Belgian or foreign company active in production, usage, repair, offer, sale, delivery, import, export or stocking of submunition in the sense of this law, is also forbidden.” The law also instructs the Belgian government to produce a list of cluster munition producers. Belgium is the first country banning investments in cluster munitions.

In July 2005 a European Parliament Resolution “calls on the EU and its Member States to prohibit through appropriate legislation financial institutions under their jurisdiction or control from investing directly or indirectly in companies involved in production, stockpiling or transfers of anti-personnel mines and other related controversial weapon systems such as cluster sub-munitions". This resolution forms the perfect starting point for national legislation against investments in weapons producers and traders.

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The Australia and New Zealand Banking Group Limited commonly called ANZ, is the fourth largest bank in Australia, after the Commonwealth Bank,…
Bank of America
Bank of America is an American multinational banking and financial services corporation and is the second largest bank holding company in the United States by assets, and…
Bank of Tokyo-Mitsubishi UFG
Bank of Tokyo - Mitsubishi UFJ is the largest bank in Japan. It was established on January 1, 2006, with the merger of the Bank of Tokyo-Mitsubishi, Ltd. and UFJ Bank Ltd.…
Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management…
Banco Bilbao Vizcaya Argentaria (BBVA), is a multinational Spanish banking group. It was formed in 1999 from a merger of Banco Bilbao Vizcaya and Argentaria. It provides financial…
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services provider based in North America with total assets of $699 billion…
BNP Paribas
BNP Paribas is one of the main banks in Europe. It was created on 23 May 2000 through the merger of Banque Nationale de Paris (BNP) and Paribas.…
Citigroup Inc., doing business as Citi, is a major American financial services company based in New York, NY. Citigroup was formed from a merger between Citicorp and financial…
Commerzbank AG is Germany's second largest bank, headquartered in Frankfurt am Main. Next to a large presence in the German banking market, Commerzbank has numerous branch…
Commonwealth Bank
Commonly referred to as the Commbank, the Commonwealth Bank of Australia was founded in 1911 by the Australian government, listed on the Australian Stock Exchange in 1991,…
Crédit Agricole
The Crédit Agricole Group is a unified but decentralised group consisting of 39 Regional Banks, Crédit Agricole S.A. and many subsidiaries. It includes Crédit…
Credit Suisse
Credit Suisse Group was founded in 1856 and is headquartered in Zurich, Switzerland. It serves companies, institutional clients and high-net-worth private clients worldwide,…
Deutsche Bank
Deutsche Bank was founded in 1870 and is a leading global investment bank. It has operations throughout the world and has a strong presence in Germany and Europe. The bank´s…
Goldman Sachs
Goldman Sachs (NYSE: GS) was founded in 1869 and is a leading global financial services firm that is headquartered in New York. It provides an array of financing…
Headquartered in London, HSBC is one of the largest banking and financial services organisations in the world. HSBC operates from around 6,100 offices in 72 countries and…
Intesa Sanpaolo
Intesa Sanpaolo is a banking group resulting from the merger at January 1, 2007 between Banca Intesa and Sanpaolo IMI. It has a strong international presence focused on Central-Eastern…
JPMorgan Chase
JPMorgan Chase is one of the Big Four Banks of the United States (along with Bank of America, Citigroup and Wells Fargo). The firm was formed in…
KBC is established in 1998 from a merger between two Belgian banks (the Kredietbank and CERA Bank) and the Belgian insurance company ABB. KBC is an integrated bancassurance…
Lloyds Banking Group Plc was formed on the 19th of January 2009 after Lloyds TSB acquired HBOS. The group is currently the largest retail bank in the United Kingdom with…
Mizuho Financial Group
Mizuho Financial Group is one of three Japanese "megabanks" (along with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group). The name "Mizuho" is an…
Morgan Stanley
Morgan Stanley was one of the four investment banks that for decades ruled on Wall Street (with Lehman Brothers, Merril Lynch and JPMorgan Chase). The corporation, founded…
Natixis is a French corporate and investment bank created in 2006 from the merger of the asset management and investment banking operations of Natexis Banque Populaire…
RBS was founded in 1727 and is one of the major UK banks. RBS has 40 million customers using the financial services of over 30 brands, including NatWest, Direct Line, Churchill,…
The Bank of Nova Scotia (commonly called Scotiabank in English and Banque Scotia in French) is the third largest bank in Canada by…
Société Générale
Société Générale ("SocGen") is one of the oldest banks in France, dating back to 1864. The original name was Société…
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Banking Corporation (SMBC) was established in April 2001 through the merger of two leading banks: the Sakura Bank Limited, and the Sumitomo Bank Limited.…
Modern UBS was formed through a merger of the Union Bank of Switzerland and the Swiss Bank Corporation in June 1998.  UBS is headquartered in Zurich and Basel and it…
Wells Fargo
Wells Fargo is one of the big banks in the United States, located in San Fransisco. In october 2008, Wells Fargo acquired the troubled bank Wachovia, at that moment the sixth…
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South Korea
Hanwha Corporation, the former Korea Explosives Corporation, is a world business leader in industrial explosives production, and in construction, trade, machinery, and pharmaceuticals. …
L-3 Communications
United States
L-3 Communications Corporation is a leading supplier of a broad range of products and services used in a substantial number of aerospace and defence platforms. L-3 Communications'…
Lockheed Martin
United States
Lockheed Martin is one of the worlds largest arms-producing and military services companies. It is a global security company engaged in the research, design, development,…
South Korea
Poongsan, a leading defense company in South Korea which was founded in 1968, develops military and sporting ammunition. It is the second South Korean cluster munitions company,…
Singapore Technologies Engineering
Singapore Technologies Engineering Ltd (ST Engineering) is an integrated engineering group specialising in innovative solutions and services in the aerospace, electronics,…
United States
Textron is a multi-industry company, consisting of numerous subsidiaries and operating units. One subsidiary is Textron Systems, which is active in the defence, homeland…
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Campaign on banks and arms
Sep 13, 2011 -, somos clientes, no cómplices-SETEM
May 05, 2011 - campaign movie about BBVA and link to cluster munitions

Deutsches Geld für Streubomben (German)
Aug 18, 2010 - German news item about involvement of German banks in Cluster munitions producer (7.6.2010)

the cluster bomb feeling
Nov 01, 2008 - documentary on investments of Dutch pension funds in arms industry

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