British lenders are being criticized for “virtue signalling” by refusing to offer bank accounts to defense companies.
Big 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 senior military officials that the UK must be prepared to fight war in just three years amid growing threats from China and Russia.
Lenders often dismiss defense companies because of so-called ESG policies – which aim to optimize the effect of business and investment on the environment, society and corporate governance – and fears of reputational risk, figures from the industry.
After war broke out in Gaza last year, Barclays branches across the country were attacked by pro-Palestinian protesters calling for the bank to divest from 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 damage in protest of Barclays’ investment in arms to Israel
Sir Ben Wallace said: “As war and insecurity spread around the world, it is time for our financial institutions to stop signaling these empty virtues.”
Thousands of pro-Palestinian protesters gather in Trafalgar Square calling on the UK government to stop arming Israel.
The scene at Barclay’s bank in Richmond after Palestinian Action supporters attacked several branches on June 10.
However, the failure to provide financial services to British defense companies could pose a serious threat to national security as global conflicts intensify, experts have warned.
Sir Ben Wallace, former Conservative defense secretary, told the Telegraph: “As war and insecurity spread around the world, it is time for our financial institutions to stop signaling these empty virtues.”
He added: “We need to unlock funding for British technology that will help keep us 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 greater transparency about why defense companies are being rejected.”
A police officer is at the scene in Bristol after activists attacked a Barclays branch on June 10.
A woman in Bristol carefully picks her way over the broken and stained glass of a Barclays branch.
ATMs at the St Johns Wood branch were covered in red paint after activists attacked the branch on June 10.
A report by 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 rise in complaints about debanking.
It warned that businesses had been unable to open a UK bank account and some had their business accounts closed.
In 2023, the Ministry of Defense was forced to launch an investigation after dozens of the department’s military contractors complained that they had been denied banking services or charged higher rates.