The weakest link

Internet banking is quick, easy and convenient, but the destructive activities funded by the providers are no different to ordinary accounts. Jenny Edwards investigates.

Gone are the days of queuing at your local high street bank. In fact, for many of us, gone are the days of a local high street bank.

In its place have arisen internet and telephone banking. The Nationwide Building Society was the first financial institution to offer an online current account in the UK in May 1997.(1) Since then internet banking has become commonplace.

Internet-based current accounts have a number of standard features. In general, they don't require any notice to withdraw funds and offer a chequebook and cashcard. They may also offer facilities such as overdrafts, and cheque guarantee and debit cards. These features are the same as those of a standard current account.

There are two types of current accounts with internet access. The first are offered by branchless e-banks: Cahoot, If, first direct and smile. These are all divisions of large parent banks with branches. They operate almost exclusively on the internet, all with telephone back-up. Some also offer television and text banking. Overheads of these banks are dramatically reduced - so interest rates are better.

The second type are existing high street banks and building societies which offer online access as an additional service which supplements rather than replaces branch, postal and telephone access.

Ethical lending policies
The greatest impact of any bank is through its lending policies, and through the organisations and individuals that it finances and allows to operate. Only smile, as part of the Co-operative Bank, has a comprehensive ethical lending policy (see www.co- operativebank.co.uk).

Barclays, Citigroup, HSBC and the Royal Bank of Scotland have all now adopted the "Equator Principles" which apply to projects over US$50 million and should "ensure that the projects...are developed in a manner that is socially responsible and reflect sound environmental management practices." (2)

However, both HSBC and the Royal Bank of Scotland are providing finance for the controversial Baku- Ceyhan oil pipeline. Friends of the Earth claims the pipeline will violate the Equator Principles and so it would appear that the principles are more likely to be a PR exercise than a serious commitment.

BP, which is constructing the pipeline has signed agreements with Azerbaijan, Georgia and Turkey making it exempt from any law (including environmental) that may affect its profits. (3)

Citigroup Victory
After a four-year campaign the Rainforest Action Network and the world's largest bank, Citigroup, called a truce, proving that campaigning does make a difference.

As a result of the Rainforest Action Networks' Global Finance Campaign, Citigroup became the first multinational bank to prohibit investment in any extractive industry (oil, gas, mining or logging) in primary tropical rainforests and place restrictions on destructive investment in endangered ecosystems worldwide.

Citigroup has also developed an illegal logging policy, requiring documentation of legality prior to investment in any logging or logging- related projects. Citigroup has now apparently committed to an audit of its climate- changing investments and investing significant capital in renewable energy projects. (4)

Predatory practices
Lloyds TSB subsidiary Abbey Life has been fined £1million for mortgage endowment mis- selling and other deficiencies. Lloyds TSB was also fined £1.9million for the mis-sale of its stock market linked Income & Growth Plan. Meanwhile, Citigroup paid a US$200 million out-of-court settlement after allegations of predatory lending. Predatory lending practices have been criticised for driving the poor further into poverty with high interest rate and high fee loans. (5, 6, 7)

Online scams
NatWest was forced to shut down its online bank for several hours after a fake website was set up and emails were set to consumers asking for account details and PINs.10 Similar frauds have targeted Barclays, Citibank and eBay. (11)

You can avoid being a victim of these scams by never accessing your bank account via an emailed link. Always open a separate browser window and type in the web address yourself. Additionally, never confirm security details when asked to do so in an email. Tell your bank and contact Trading Standards.

Ratings on the table
Lighter shaded marks are derived from the 'who banks with whom' element of the Banks and Building Society report in Issue 72 (Aug/Sept 2001). A lighter-shaded dot indicates that the bank provides services for just one company with these criticisms. A lighter- shaded circle indicates that the bank is associated with two or more companies. Citigroup also picked up shaded marks for companies in which it had holdings of over £1billion.

Where is your money going?
Here are just three examples of the kind of activities that your money may be supporting.

Barclays Bank was criticised in 2004 for financing an aluminium smelter plant in Iceland. The project was criticised for habitat destruction and damage, potentially harmful toxic release of sulphur dioxide and the building of a number of dams to provide energy for the plant. Friends of the Earth is campaigning to get Barclays to withdraw its financing.(28)

Royal Bank of Scotland was a co-arranger on loans made to Angolan state- owned oil company Sonangol which meant that Angola had breached an IMF borrowing agreement. Global Witness has campaigned against loans to Angola as over $1billion per year of the country's oil revenues (a quarter of the states' yearly income) has gone unaccounted for since 1996.

Political and business elites have been criticised for exploiting the country's civil war to siphon off oil revenues. One in four of Angola's children die before the age of five and one million people remain dependent on food aid.(29,30)

Citigroup is part of the National Foreign Trade Council (NFTC) lobby group. The NFTC has argued that the EU's moratorium on GMOs and associated laws regarding tracing and labelling must be countered. It also called for the striking down of bans on various food additives, the overturning of EU chemicals legislation and the trashing of various other environmental and health policies.(31)

References

1 www.moneyonline.co.uk 23/3/04
2www.equator-principles.com 5 May 2004
3 www.foe.co.uk/campaigns/corporates 10/5/04
4 www.ran.org 10/5/04
5 Multinational Monitor, September 2002
6 RAN Factsheet 2001
7 Lloyds TSB Group Annual Report & Accounts 2003
10 http://money.guardian.co.uk Guardian Money, 9/12/04
11 The Guardian,15/9/03
12 Ethical Consumer 71, June/July 2001 13 Abbey National Annual Report & Accounts, 2003
15 Bank of Ireland Group Report & Accounts for the Year Ended 31 March 2003
16 Who Owns Whom 2003/2004
17 The Guardian 9/5/03
18 www.bigcampaign.org 10/11/03
19 Boycott Bush website May 2002
20 Multinational Monitor 23/4/02
21 The Co-operative Bank's Financial Statements 2003
22 HBOS Plc Annual Report & Accounts 2003
23 Big Campaign website 26 August 2003
24 Guardian 9/5/03 25 Lloyds TSB Annual Report & Accounts 2003
26 www.nationwide.co.uk 21/4/04
27 Labour Research August 2003
28 Earth Matters Spring 2003
29 Friends of the Earth Special B: Trade August 2003
30 All the Presidents Men, Global Witness, 2002
31www.globalwitness.org 13 May 2004