Lamb lies down on banks

SHAREHOLDERS of the TSB, subject to a pounds 15bn merger proposal from Lloyds Bank, face lobbying from an unusual source - a student campaign group. The Lloyds and Midland Boycott group (Lamb) aims to persuade those with TSB shares to extract a more ethical lending stance from Lloyds, before agreeing to the merger.

Lamb is planning a series of unspecified actions at shareholder meetings, to draw attention to what it claims are Lloyds' pernicious lending activities in the Third World. Past protests have included demonstrations at Lloyds' agms, and takeovers of branches.

The boycott group says it is gaining widespread support at universities. Lamb claims 10,000 students have already been persuaded not to bank with Lloyds or Midland, and it expects many thousands more to give them a wide berth during the freshers' jamboree. At Manchester University, Lloyds and Midland sign-ups are said to have fallen off by 50 per cent. Student unions are passing motions supporting Lamb policies. They are severing links with the banks, banning them from campus, withdrawing union accounts and encouraging students to take their money elsewhere, the group says.

Lamb takes its lead from the student boycott of Barclays Bank over South Africa in the 1970s and 1980s, credited with persuading a significant percentage of students not to bank with Barclays and encouraging the bank's eventual withdrawal from the country.

This sort of consumer campaign hits the banks hard. Financial institutions fall over themselves to tempt freshers to sign up with them, knowing that graduates will eventually generate the greatest profits.

On average, each individual makes a retail bank pounds 18,000 in the lifetime of his or her account. Most people never change their bank - so the battle for numbers at this stage, when the majority of students first open up an account, is crucial.

The main thrust of Lamb's campaign is a reduction of Lloyds' and Midland's developing world debts by 75 to 100 per cent. Or failing that, a more constructive approach to debt, for example converting it into sustainable development swaps, where old loans are converted into investment in more progressive grass-roots projects.

Lloyds has pounds 2.7bn of exposure to developing countries, and Midland has pounds 1.7bn of debts outstanding - according to 1994 figures from Lamb. Most of the money is in Latin America. The student organisation points out that Barclays and National Westminster reduced their loan holdings significantly by 1994.

Lamb says its views are supported by a number of development organisations, including Christian Aid.

The group wants to see environmental lending criteria applied to all corporate lending, and a ban on finance for animal testing and factory farming. Its campaign singles out Lloyds for particular criticism over environmentally damaging investments.

Lloyds and Midland, meanwhile, refute all accusations of unethical lending. Lloyds says it acted properly when many of the developing countries it lent to got into financial difficulties in the early 1980s: "We took the decision then that, as responsible lenders, we could not simply walk away from the problem.

"But unless these countries could re-establish a reputation for financial reliability by repaying at least part of their debts, they would be unable to raise the finance they needed in the future."

Midland Bank says that as a main UK bank, it makes too many loans day every day to scrutinise the ethical considerations in each case. "We should not be expected to act as policemen," it declares.

Other banks already have a more consciously ethical stance. The Cooperative Bank's ethical policies have proved a successful means of attracting customers, while the Royal Bank of Scotland uses environmental assessment as one of its lending criteria and has now confirmed it will not fund oppressive regimes.

Lamb also points to progressive signs from NatWest on environmental issues.