News
Finance for war
Values-based banks reveal the global financial industry’s ‘disturbing role’ in financing weapons and war.
3 March 2024
New research from Ethical Consumer into banks directors’ pay reveals that some of the biggest banks have the poorest ethics, and are also paying their directors excessive amounts – the four worst culprits paid upwards of £10m and £30m in the last year.
This research comes at a time when many are feeling a steep increase in the cost of living, with water, gas and electricity and council tax bills all set to go up, as well as many benefits being cut following the mini budget on 26 of March.
Salaries for directors have been increasing at a huge rate since the pandemic, while increasing calls for a wealth tax are being led by campaigners such as Gary Stevenson and the Patriotic Millionaires.
‘The obscene levels of pay received by banking bosses and executives is an insult to the millions of people who are currently struggling to make ends meet.
‘These people don’t necessarily work harder than the average person; they just work in a sector where excessive pay has become the norm. We need to challenge the idea that it is acceptable for anyone to earn that amount of money, especially when so many people work for little more than the minimum wage.’
ALEX CRUMBIE
Writer/researcher
In 2023, Liz Truss abandoned the banker’s bonus cap, which was initially set at a bonus to pay ratio of 2:1.
The four banks paying their directors the highest total remuneration, which includes base pay and bonuses, were Goldman Sachs, JP Morgan Chase, HSBC and Barclays
Goldman Sachs, which lobbied the government to drop the bonus cap, set its cap to 25:1 and paid its CEO a whopping £30.7m. Goldman Sachs owns the Marcus brand, which has nearly one million UK customers.
JP Morgan Chase’s CEO was paid a total of £28.8m. ‘Chase’ is the company’s UK brand, which has over two million customers.
HSBC, which also owns First Direct, has a bonus pay cap of 9:1 and paid its CEO a total of £10.6m.
Barclays, which now also owns Tesco Bank, paid its CEO a total of £10.5m, with a bonus pay cap of 10:1.
The research shows that these banks not only award their executives the most excessive pay, but also received the lowest ethical scores overall.
Nearly all of them scored 0/100 across all five categories: climate, tax conduct, company ethos, lending policy and loans and investments.
They also financed some of the most controversial areas, such as nuclear weapons, cluster munitions and fossil fuels, with many having links to funding companies that supply weapons to Israel.
HSBC’s policy did exclude the financing of cluster munitions, but it was still found to be a major funder of the arms industry, including nuclear weapons.
Other banks, such as NatWest and Lloyds Bank, which also received ethical scores below 10/100, all paid their directors over £1.4m and scored 0 across 3 categories: climate, tax conduct and company ethos.
Nearly all of them are marked as banks to avoid by Ethical Consumer in all three of the new banking guides: current accounts, savings accounts and mortgages.
Triodos Bank came top of Ethical Consumer’s ranking and was awarded Best Buy status. It also paid its CEO one of the lowest amounts relative to other banks.
‘At Triodos Bank, we are committed to a fair and appropriate remuneration policy, and we publish the pay ratios between the highest paid executives and all coworkers. The positive impact we have is achieved by all our employees together, therefore, we do not pay individual bonuses. We hope to encourage the wider industry to address grossly excessive remuneration and shift towards alternative pay structures, which appropriately reward people for their work and put customers first.
‘We are proud to be recognised as an Ethical Consumer Best Buy, reflecting our approach to sustainability, transparency, and social responsibility. This is the most comprehensive analysis of UK ethical bank options available and incorporates important metrics and an evaluation of lending policies and approaches to important issues like remuneration and incentives.’
BEVIS WATTS
CEO of Triodos Bank UK
Ethical Consumer recommends consumers move from unethical banks to more ethical options, such as Triodos, to put pressure on unethical banks to change their poor practices.
Values-based banks reveal the global financial industry’s ‘disturbing role’ in financing weapons and war.
Banks urged to ‘Think Bolder’ to drive positive shift in global finance sector.
By William de Vries, Director of Impact Equities & Bonds at Triodos Investment Management.
UK consumers urge banks to invest in long-term sustainable change in light of cost of living and climate crises.
Subscribe to our newsletter
Weekly ethical news, offers, comps and a free digital mag (quarterly) – what’s not to love?
