Bolkestein sparks row over ‘racist’ bank credit ratings

Date: 28/03/02

By Laurence Frost

BANKS should be free to decide whether to grant loans on the basis of a customer's nationality, according to single market chief Frits Bolkestein.

In a statement that has surprised financial institutions and social campaigners alike, the commissioner said there was 'some room for nationality to be a relevant factor' when calculating credit ratings that affect loan decisions.

Bolkestein was responding to a call by MEP Yasmine Boudjenah for legal action against France after its highest constitutional authority, the Conseil d'Etat, overturned a ban on loan decisions based on nationality.

The French Communist deputy condemned Bolkestein's 'regrettable and dangerous laissez-faire approach', which she said 'leaves the door open' to racism.

The Conseil d'Etat ruling means non-French EU citizens living in France could be forced to pay higher rates for the same loans given to French customers - or refused credit altogether.

Controversially interpreting article 12 of the EU Treaty - which bans discrimination on grounds of nationality - Bolkestein said that 'in the Commission's view' the use of data on a credit applicant's nationality could still be used in processing credit agreements.

He said differences in national inheritance and debt recovery laws meant that 'the possible incidence of foreign law is something that creditors might need to consider'.

Financial institutions reacted with surprise to the statement. The European Banking Federation (EBF) said it had been unaware that the Commission backed the use of nationality in lending decisions.

'It's pretty astonishing,' said an EBF spokeswoman. 'It seems problematic not to grant someone credit purely on nationality terms.'

Boudjenah, president of the NGO Mediterranean Solidarity, warned that Bolkestein's failure to act would encourage discrim-ination against Europeans and non-Europeans alike.

'If you leave the door open to this kind of discrimination then there are some banks who will see a German credit applicant in a better light than a Portuguese or a Greek,' said the MEP.

Although it is always hard to prove an individual decision was unfair, Boudjenah said, a multitude of complaints left no doubt that some banks were withholding credit on racist or discriminatory grounds.

'Bolkestein is not naïve,' she said. 'He knows very well this discrimination exists.'

Boudjenah said the EU executive should back the nullified 1998 recommendation made by France's National Commission on Information Technology and Civil Liberties, which declared that 'nationality cannot be a variable used in [credit risk] calculations'.

Banks should be free to decide whether to grant loans on the basis of a customer's nationality, according to single market Commissioner Frits Bolkestein.