British lenders are under fire for ‘virtue signalling’ by refusing to offer bank accounts to defense companies.
Major banks have been accused of refusing to provide financial services to arms companies, despite rising geopolitical tensions around the world.
It comes amid warnings from top military officials that Britain must be prepared to go to war in as little as three years, amid growing threats from China and Russia.
Lenders often exclude defense companies due to so-called ESG policies – which aim to optimize the impact of business and investment on the environment, society and corporate governance – and fear of reputational risks, according to industry figures.
After war broke out in Gaza last year, Barclays branches across the country were attacked by pro-Palestinian protesters calling on the bank to get rid of Israeli arms manufacturers.
Police officers surround a Barclays bank branch in Bury, Manchester after windows were smashed and red paint sprayed. Palestine Action has claimed responsibility for the damage in protest at Barclays’ investments in weapons in Israel
Sir Ben Wallace said: ‘As war and insecurity spread around the world, it is time for our financial institutions to stop this senseless virtue signaling.’
Thousands of pro-Palestinian protesters gather in Trafalgar Square, calling on the British government to stop arming Israel
The scene at Barclay’s bank in Richmond after several branches were attacked by Palestine Action supporters on June 10
However, failure to provide financial services to Britain’s defense companies could pose a serious threat to national security as global conflicts flare, experts have warned.
Sir Ben Wallace, a former Tory defense secretary, told the Telegraph: ‘As war and insecurity spread across the world, it is time for our financial institutions to stop this senseless virtue signaling.’
He added that ‘we need to release funding for British technology that will help us stay safe.’
And Kevin Craven, chief executive of defense industry body ADS, said a strong defense sector is essential for society.
“You can’t have a free society unless you have a strong defense sector that keeps everyone safe,” he told the newspaper.
‘We believe the best solution is more transparency about why defense companies are being rejected.’
A police officer is on the scene in Bristol after a Barclays branch was targeted by activists on June 10
A woman in Bristol carefully makes her way over the shattered and stained broken window glass of a Barclays branch
The St Johns Wood branch’s ATMs were covered in red paint after the branch was targeted by activists on June 10
A report from ADS and UK Finance, which represents the banking sector, warned last year that access to financial and banking services has become more difficult following a spike in complaints about debanking.
It warned that businesses were unable to open UK bank accounts and some had had their business accounts closed.
In 2023, the Defense Department was forced to launch an investigation after dozens of military contractors complained to the department that they had been denied banking services or charged higher rates.