Banks break own rules to hide over $30 billion of loans to lower income countries
In a new briefing released today, Debt Justice reveals that multinational banks have failed to disclose over $30 billion of loans to lower income countries.
In 2019, banks agreed to disclose details of loans to lower income countries under the ‘Voluntary Principles for Debt Transparency’. Yet in the four years since, only two banks have disclosed just six loans, totaling $2.9 billion. Debt Justice estimates that banks have kept a further $37 billion of loans hidden.
Banks which have disclosed no loans include Société Générale, Standard Chartered, Deutsche Bank, Citigroup and HSBC.
Tim Jones, Head of Policy at Debt Justice, said:
“Transparency is a key tool to ensure public money is spent well. But banks have ignored the disclosure principles they signed-up to, ignored the repeated G20 requests for them to comply, and assumed everyone else would ignore their lack of compliance. The only way banks will disclose loan information is if they are made to by legislation or regulations.”
The UK government has spent £460,000 of aid money on the scheme, or over £75,000 per loan disclosed. The G20 have said they ‘support’, ‘welcome’, or ‘look forward’ to updates about the disclosures on twelve separate occasions.
In 2019, the Institute of International Finance (IIF) and its members agreed ‘Voluntary Principles for Debt Transparency’, which committed banks to disclose key details of loans within 120 days of contracts being signed. In launching the principles the IIF said: “The Principles are well supported by the relevant cohort of the IIF membership, and every effort will be made to promote adherence more broadly.”In 2021 the OECD created a registry on which the loans could be disclosed, but Credit Suisse and Mitsubishi UFJ Financial Group (MUFG) are the only lenders to do so.
Debt Justice has written to 19 banks which have not disclosed any loans on the OECD registry, but for which there is evidence they are lending to countries covered by the scheme. Of the 19, only two have responded.
Standard Chartered said: “Our participation in any transaction, or relationship with a client, remains confidential and is guided by our public Position Statements.”
Deutsche Bank said: “We are engaged with the IIF around the Voluntary Principles for Debt Transparency. As you will be aware, the OECD and the IIF have stated publicly there are challenges relating to information disclosure on loans that need to be addressed before the initiative can make further progress. We will continue to engage with the IIF on the initiative and to monitor developments closely, but we cannot provide more information to you at this time.”
The others, including Société Générale, Citigroup and HSBC have failed to respond.
This briefing has also been shared with the IIF, who responded that they would not be commenting formally.