Major commercial and savings banks fund businesses denounced for their practices.

Esther Salis

The function of commercial and investment banks is to benefit from the savings of ordinary people—savings which are deposited after long hours of work, normally poorly paid. The question is: What are done with these millions of euros once they are deposited in banks? Commercial and savings banks use a good part of that money for investments in transnational companies so that they can carry out their business enterprises. In many cases these projects involve the production of arms—to carry out wars and increase military spending—the destruction of the environment—to extract natural resources—, up to, ignoring all sorts of human and labor rights, attacks on the life of entire communities.

The fact is the Spanish bank, despite the crisis, continues to earn spectacular profits. According to the figures of the first half of 2008, the five principal banks of the Spanish state—Santender, BBVA, La Caixa, Caja Madrid and Banco Popular—began the year with net profits of 10.6 billion euros. Where do these profits come from and what do these banks finance to continue earning so much money? The answer lies, in part, with the investment and financing that these banks make in companies with questionable practices.

Financing and Investments

According the campaign ‘BBVA Without Arms,’ this bank is one of the main financial entities implicated in the arms trade. But more directly, this very bank is implicated in the financing of companies dedicated to the production of all types of arms. In 2005, BBVA— along with other financial entities—extended in a 2.2 billion dollar credit to the company Raytheon, one of the largest defense contractors in the United States. On the other hand, Santender possesses 50% of the company Vista Capital, that in turn controls 45.5% of the Unión Española de Expolsivos, S.A. If this wasn’t enough, BBVA is financing 50% of by the Spanish company ENCE’s investment in the construction of a cellulose plant in Uruguay, with all of the social and environmental harm—the displacement of communities and degradation of native fauna—that this would bring.
Indra is an example of a major armament company where the Bank is strongly implicated. This Spanish company, one of the largest in the armament sector, is dedicated the production of the warfare and missile electronic systems as well as other information technologies for military applications. Indra participates in the military programs of the EU, NATO, and the US. In the stockholders of Indra we can find in the largest shareholders Caja Madrid, along with BBVA and Santender, among others.

On the other hand, La Caixa is one of the largest shareholders in a company as questionable Repsol YPF. Its practices are put into perspective above all in Latin America. In Argentina, for example, Repsol YPF [Yacimiento Petrolíferos Fiscales – the former Argentine state oil company] operates the Loma de la Lata oilfield in Mapuche territory. There, as a result drinking contaminated water and breathing contaminated air, levels of metal in the population’s bloodstream are 700 times that which is permitted by law. Additionally, the privatization of YPF resulted in the firing of thousands of workers. In Bolivia its operations are carried out on the protected territories of various indigenous communities, displacing them. In additional to being accused of contraband oil extraction, in 2006 Repsol was accused of illegal appropriating state oil fields. Repsol discovered a deposit at the Capachos oil well in 2002. In 2003 and 2004 the area experienced an increase in paramilitary violence. On year later, Repsol began drilling.

On the other hand, many of these banks—Caja Madrid, BBVA and La Caixa among them—have recently provided 1.7 billion euros of financing to Acciona, one of the principal shareholders of Endesa, a company that has been involved in more than one controversy in Chile for the construction of a gigantic dams in Ralco, where more that 3,500 hectares of Mapuche-Peuhenche territory was flooded and thousands of indigenous people were displaced. Despite this Endesa, with the support of all of these commercial and savings banks, continued its plans and now plans to construct five large hydroelectric dams in Chilean Patagonia. These dams are located on the undisturbed Baker and Pascua rivers, flooding thousands of hectares of great ecological value. Additionally these dams complement the construction of a network of high-voltage power lines that cross the country from north to south with more than 2,300 km of lines affecting large stretches of natural spaces and thousands of indigenous communities.

The Bank saves face in mortgage crisis

Faced with the implosion of the mortgage bubble and the resulting crisis in that sector, commercial and savings banks have come to the rescue of large companies dedicated to the construction and sale of houses. Consequently a large part of these companies are refinancing their debts that they acquired with the Bank, which total more than 16 billion euros. The Bank is one of the largest financiers of the most important mortgage companies. For example, 1.6 billion of financing for Habitat came from, among others, La Caixa (150 million), Banco Popular (150 million), Caja Madrid (120 million), Santender and BBVA (100 million) Banc Sabadell (75 million) and Caixa Catalunya (75 million). Despite this Habitat remains in a critical situation awaiting new investors. In another similar case, La Caixa and el Banco Popular wrote off the debt of the company Colonial, changing it stock in the real estate company. And to let the statistics speak for themselves, the interests of banks and real estate companies are so intertwined that 40% of the money that commercial and investment banks loan go to real estate and construction companies.