KBC Responds to Don’t Bank on the Bomb

KBC, a Belgian financial institution, responded to the 2016 update of Don’t Bank on the Bomb. The response reflects on KBC’s recently updated policy around weapons- including nuclear weapons. PAX welcomes the new KBC policy and appreciates the KBC engagement around the Don’t Bank on the Bomb report. The full response can be read here, and there is more information about the investments and the producer after the jump.

KBC Group  provided loans for an estimated amount of US$ 117 million to Serco. (see table below). The table shows all loans closed since January 2013 or maturing after August 2016.

  • Loans provided by KBC Group
Company Total value
(US$ mln)
Est. participation of this bank
(US$ mln)
Closing date Maturity date
Serco 1,159 72 21-2-2012 28-3-2017
Serco 714 45 12-3-2015 12-3-2019

Source: Thomson Reuters Eikon, “Loans”, viewed in July/August 2016; Bloomberg, “Loans”, viewed in July/August 2016.

Serco held until recently a 33.3% share in the joint venture AWE-ML, the company that manages the UK Atomic Weapons Establishment (AWE).[i] Following a previously equal distribution with partners Lockheed Martin and Jacobs Engineering, it was agreed during a restructuring in March 2016 that Lockheed Martin would increase its share to 51%, with Serco and Jacobs Engineering then holding 24.5% each.[ii] The AWE is responsible for the maintenance of the warheads for the country’s Trident nuclear arsenal. Trident is a submarine-launched, intercontinental ballistic missile system carried by the fleet of Vanguard-class submarines. AWE-ML is responsible for managing and operating the AWE sites at Aldermaston, Burghfield, and Blacknest, and is a partner in the consortium operating the nuclear arms depot in Coulport, Scotland. [iii]

AWE’s involvement with Trident missiles covers the entire life cycle, from initial concept to assessment, design, component manufacture and assembly, in-service support and decommissioning and disposal.[iv] AWE-ML has a 25 year-long non-revocable contract to run the AWE that expires in March 2025. [v] In the 15 years from 2000 to 2015, the contract had a value of an estimated £ 9 billion. The contract came under discussion in 2015 due to poor performance of the operator.[vi] In March 2016, a modified contract between the Ministry of Defence and AWE-ML was agreed, described as including performance incentives as well as penalties for not meeting targets, and including the new consortium structure.[vii]

According to recent reports, work is already under way at the AWE facilities in Aldermaston and Burghfield to upgrade the existing Trident arsenal. The “Nuclear Warhead Capability Sustainment Programme” also entails the development of an entirely new warhead, the Mark 4A or Mk4A.[viii] The programme reportedly commenced without formally notifying the UK parliament.[ix]

[i]      Serco, “Annual Report 2015”, Serco, February 2016.

[ii]     AWE-ML, “Our company”, Website AWE-ML (www.awe.co.uk/about-us/our-company/), viewed June 2016;
Edwards, R., “Anger as US arms dealer takes over running of Scottish nuclear bomb base”, Scotland Herald (www.heraldscotland.com/news/home-news/anger-as-us-arms-dealer-takes-over-running-of-scottish-nuclear-bomb-base.13864732), 28 May 2011;
Serco, “AWE review concluded successfully and updated contract agreed”, Press Release Serco, 31 March 2016 (www.serco.com/media/pressreleases/awe-review-concluded-successfully-and-updated-contract-agreed).

[iii]    AWE, “Our company”, Website AWE (www.awe.co.uk/about-us/our-company/), viewed June 2016;
AWE, “Overview”, AWE, July 2014 (www.awe.co.uk/app/uploads/2014/07/AWE-OVERVIEW-FINAL.pdf).

[iv]     AWE, “Overview”, AWE, July 2014 (www.awe.co.uk/app/uploads/2014/07/AWE-OVERVIEW-FINAL.pdf).

[v]     The Guardian, “Britain’s nuclear spending soars amid defence cuts”, Website The Guardian, 2 October 2011 (www.guardian.co.uk/uk/2011/oct/02/ministry-of-defence-nuclear-spending-project-pegasus);
AWE, “Annual review 2013”, AWE, May 2014.

[vi]    Collingridge, J., “Nuclear contract may be scrapped”, Website The Sunday Times, 15 March 2015 (www.thesundaytimes.co.uk/sto/business/Companies/article1531071.ece).

[vii]    UK Ministry of Defence, “MOD drives efficiencies in improved contract for nuclear sites”, Website UK Ministry of Defence, 31 March 2016 (www.gov.uk/government/news/mod-drives-efficiencies-in-improved-contract-for-nuclear-sites);
Serco, “AWE review concluded successfully and updated contract agreed”, Press Release Serco, 31 March 2016 (www.serco.com/media/pressreleases/awe-review-concluded-successfully-and-updated-contract-agreed).

[viii]   Nuclear Information Service, “AWE: Britain’s Nuclear Weapons Factory Past, Present, and Possibilities for the Future”, Nuclear Information Service, June 2016 (www.nuclearinfo.org/sites/default/files/AWE%20-%20Britain%27s%20Nuclear%20Weapons%20Factory_0.pdf);
Ministry of Defence, “Appointment as Senior Responsible Owner for the Nuclear Warhead Capability Sustainment Programme”, Letter by the Ministry of Defence to Dr Paul Hollinshead, DST Director, 2 July 2014 (www.gov.uk/government/uploads/system/uploads/attachment_data/file/523656/Nuclear_Warhead_Capability_Sustainment_Programme_SRO_appointment_Letter_-_P.Hollingshead.pdf).

[ix]    Nuclear Information Service, “AWE: Britain’s Nuclear Weapons Factory Past, Present, and Possibilities for the Future”, Nuclear Information Service, June 2016 (www.nuclearinfo.org/sites/default/files/AWE%20-%20Britain%27s%20Nuclear%20Weapons%20Factory_0.pdf);
Norton-Taylor, R., “Trident is being upgraded in secret, report claims”, Website The Guardian, 7 June 2016 (www.theguardian.com/uk-news/2016/jun/07/trident-upgrade-secret-nuclear-warhead-new-weapon).

written by

Susi Snyder is the nuclear disarmament programme leader for PAX (formerly IKV Pax Christi) in the Netherlands. She is one of the primary authors of the 2013, 2014, and 2015 Don't Bank on the Bomb reports.

Comments are closed.

Leave a Reply

Want to join the discussion?
Feel free to contribute!