British lenders are under fire for ‘virtue-signalling’ by refusing to offer bank accounts to defence companies.
High street banks have been accused of refusing to provide financial services to arms firms despite mounting geopolitical tensions across the globe.
It comes amid warnings from top military officials that the UK must be prepared to fight a war in as little as three years amid growing threats from China and Russia.
Lenders often rule out defence firms due to so-called ESG policies – which aim to optimise the effect of business and investing on the environment, society and corporate governance- and fears of reputational risk, industry figures said.
After war broke out in Gaza last year Barclays branches across the country were attacked by pro-Palestine protesters calling for the bank to divest from Israeli weapons manufacturers.
Police officers surround a Barclays bank branch in Bury, Manchester after windows were smashed and red paint was sprayed. Palestine Action have claimed responsibility for the damage in protest to the investment Barclays have in arms to Israel
Sir Ben Wallace said: ‘As war and insecurity spreads around the globe, it is time for our financial institutions to stop this vacuous virtue signalling.’
Thousands of pro-Palestine protesters gather in Trafalgar Square calling on the UK government to stop arming Israel
The scene at Barclay’s bank in Richmond after several branches were attacked by supporters of Palestine Action on June 10
However, a failure to provide financial services to Britain’s defence companies could pose a serious threat to national security as global conflicts heat up, experts have warned.
Sir Ben Wallace, a former Tory defence secretary, told the Telegraph: ‘As war and insecurity spreads around the globe, it is time for our financial institutions to stop this vacuous virtue signalling.’
He added that ‘we need to unlock funds for British technology that will help keep us safe.’
And Kevin Craven, chief executive of defence industry body ADS, said that a strong defence sector is essential for society.
‘You cannot have a free society unless you have a strong defence sector that keeps everyone safe,’ he told the newspaper.
‘The best solution, we think, is more transparency around why defence companies are being refused.’
A police officer stands at the scene in Bristol after a Barclays branch was targeted by activists on June 10
A woman in Bristol carefully picks her way over the shattered and stained broken window glass of a Barclays branch
The St Johns Wood branch cash machines were covered with red paint after the branch was targeted by activists on June 10
A report by ADS and UK Finance, which represents the banking sector, last year warned that accessing finance and banking services has become harder following a spike in debanking complaints.
It warned that companies had been unable to open a UK bank account and that some had their business accounts closed.
In 2023, the Ministry of Defence was forced to launch an investigation after dozens of military contractors to the department complained they had been denied banking services or charged higher rates.
