Banks--the facts.

Inside the vault

The world's top 50 companies in 2005 (1) recorded a profit of $433 billion--up 27% from the previous year. More than a fifth were banks (22%)--Just ahead of oil and gas companies (20%). Assessing the top transnationals solely by the value of the assets that they control, banks occupied over a gob-smacking half (56%) of the top 50 in 2005, and, when combined with diversified financial corporations (offering many of the services of modern-day banking), dominated the list (with 80%). Here's a comparison of the size of the assets that just a few of these companies control:

[ILLUSTRATION OMITTED]

                                                    which is more than
                          Profits      Assets       the combined 2005
Bank         Country      ($ Billion)  ($ Billion)  GDPs (2) of:

Citigroup    US           17.05        1,484.10     all countries in
                                                    South America
                                                    except for Peru
                                                    and Brazil
Mizuho       Japan         3.90        1,306.60     Indonesia and
Financial                                           Pakistan
BNP Paribas  France        5.80        1,228.03     Greece, Austria,
                                                    Switzerland,
                                                    Portugal, Denmark,
                                                    Norway and Belarus
ING Group    Netherlands   8.10        1,175.16     The Netherlands,
                                                    Belgium, Sweden
                                                    and Iceland
JP Morgan    US            4.66        1,138.47     Canada
Chase
HSBC Group   Britain       9.52        1,031.29     Australia, Ireland
                                                    and New Zealand
Royal Bank   Canada        2.31          351.74     Saudi Arabia
of Canada
National     Australia     2.31          298.36     Malaysia
Australia

[ILLUSTRATION OMITTED]

Credit where credit is due

Each credit card shows a monthly 'balance owing'. In Rich World economies where this magazine is read, this amount on average is as high as 43% of the standard monthly wage. (3)

                                                 Average
                                    Balances     amount
                                    accruing     owed per
            No of                   interest in  card in   Average
            credit                  January,     January   monthly
            cards       Population  2006 (US$    2006      wage in
            (millions)  (millions)  million)*    (US$)*    US$

Australia   12.6        20.6        18,415       1,462     3,291
Britain     71.7        59.0        95,184       1,328     3,270
Canada      56.4        33.0        32,939         587     3,155
                                                             (2005)
Ireland      2.1         4.1         2,927       1,394     Not
                                                             available
New          2.4 (4)     4.1         2,705       1,127     Not
  Zealand/                                                   available
  Aotearoa

In Poor World economies where consumers are still buying with cash or from savings, banks are aggressively promoting credit card usage by offering interest-free periods, waived annual fees, and free additional cards on accounts. Such tactics will produce an estimated increase in credit card usage of 298% in Mexico (5) and 640% in the Czech Republic by 2010. (11) Following the discrimination against the poor in all lending, people in developing economies pay an interest rate premium to access card credit. The holder of a HSBC or Scotiabank credit card in Mexico pays a total annual card rate of 77%, compared with 16% in Britain and 18% in Canada. (5) On average, Brazil's credit card holders pay 10.24% a month or 122% per year. (7)

[ILLUSTRATION OMITTED]

*Currency conversions as of July 2006.

The Golden Fleecing

As profits have risen, so too have fees. Mexican banks make 31% of their income from fees, compared to 36% in Brazil and 44% in the US. (6) Industry leader, Citibank, now attributes almost half of all revenues to this source. (7) While Britain still retains relatively fee-free banking for individual consumers, in Australia--where bank revenue from fees rose 148% from 2000 to 2005--the largest component of bank fees from households is on deposit accounts. (9)

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

Bankrolling disasters

Environmentally or socially destructive corporate ventures can be brought to a halt if banks decide not to lend money to them. A recent report card on 39 of the world's top banks done by BankTrack and WWF (8) assesses bank policies on lending across a broad range of social and environmental responsibilities and fails them all. No bank had standards for fisheries and agriculture; only one had a policy specifically for dams (HSBC), extractive industries (ABN AMRO) and chemicals (HSBC). The vast majority of banks have no guidelines to prevent loans to human rights abusers, with only eight banks reporting a human rights policy in place. Even those leading the rankings have vaguely worded policies with limited commitments, which fail to meet international standards. Using a ranking of A to E, with C- as a pass, the highest overall average score achieved by two banks was a grade of D+. The list includes:

Score          Banks

A - C- (Pass)  None.
D+             ABN AMRO; HSBC Group.
D              Barclays; Bank of America; Citigroup; JP Morgan Chase.
D-             Credit Suisse Group; Dresdner Bank; ING Group; Royal
               Bank of Scotland; Westpac.
E              BNP Paribas; Deutsche Bank; HBOS; Korean Development
               Bank; Bank of Tokyo-Mitsubishi; Royal Bank of Canada;
               Sumitomo Mitsui Financial Group; UBS; Wells Fargo.

Ethical endeavours

Green, social and ethical funds are flourishing under pressure placed by NGOs on financial institutions to engage in ethical investing practises. In 2004 there was a 13% increase in ethical funds from the previous year. By refusing to invest with certain companies guilty of unethical investments, emerging ethical banks like The Netherlands' Triodos and Britain's Co-operative Bank (see page 21) can ensure their investors' money does not contribute towards human rights or environmental abuses. But despite the huge increases globally, ethical funds still represent less than 5% of total investments--only 0.47% of the total assets managed on the European continent; and just 1.14 % of total investment management in Australia. (10)

[ILLUSTRATION OMITTED]

1 As ranked annually by Forbes magazine from a compilation of sales, assets, profits, and market capitalization current at 30 May 2005. 2 Compiled from GDP statistics in the US Central Intelligence Agency's The World Factbook 2006, www.cia.gov. 3 Unless otherwise indicated, all credit card information in this table was compiled from information provided by the following organizations: Australia--The Reserve Bank of Australia. Britain--British Bankers' Association (Visa and Mastercard affiliated companies only). Canada--Bank of Canada. Ireland--Central Bank and Financial Services Authority. New Zealand--The Reserve Bank of New Zealand. 4 'Premium Credit Cards in Asia-Pacific 2006', www.the-infoshop.com, June 2006. 5 'Banks Aggressively Promote Use of Credit Cards in Mexico', SourceMex 6 April 2004. 6 The Bankers Association of Mexico quoted in footnote 5. 7 R Cottrell, 'Thinking big: A survey of international banking' in The Economist, 20-26 May 2006. 8 Shaping the future of sustainable finance: moving from paper promises to performance, January 2006. 9 The Reserve Bank of Australia. 10 Researched by Dheepthi Namasivayam using sources including BankTrack What is Ethical Banking? www.banktrack.org, 1 March 2005; and an October 2005 survey report by Ethical Investment Association (EIA) Australasia entitled Sustainable Responsible Investing in 2005. 11 O Hofmann, Debit cards dominate and credit cards gain ground in the Czech Republic, Euromonitor International, 25 January 2006.