Bank of Scotland says sorry over porn deal funding

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Key points

• Bank issues public apology after 'porn' accusations

• BoS part-funded acquisition of pornographic magazines

• Lending policy of bank to be investigated

• Matter brings banking ethics into question

Key quote

"We recognise this decision may have caused offence and embarrassment. We have to recognise that there are many different points of view among our stakeholders." - Shane O’Riordain, head of public relations

Story in full THE Bank of Scotland was forced to issue a public apology yesterday after admitting it had part-funded the acquisition of several pornographic magazines from the publisher Richard Desmond.

The bank also promised to review its lending policy after confirming it had extended more than 5 million of debt financing to a company called Remnant Media, to buy 45 adult magazines from Mr Desmond’s portfolio. The titles include Asian Babes, Readers’ Wives, Mothers-in-Law and 60 Plus.

Christine Cook, president of the Association of Scottish Businesswomen, was one of several who expressed anger at the deal, saying she was "disappointed" by the bank’s decision to support a "horrifying" industry.

British Chambers of Commerce president Isabella Moore said the loan called into question the bank’s agenda to support women in business.

It also appeared to contradict the bank’s "Equality and Diversity" strategy, which explicitly calls for its business to be underpinned by "social, moral and political" factors.

Shane O’Riordain, the bank’s head of public relations said the bank was sorry for any disappointment caused. "We apologise for any offence or embarrassment this may have caused," he said. He also promised an investigation into the bank’s future lending.

"We have listened to what our stakeholders have to say, and we will review our lending policies and processes as a matter of urgency."

Mr O’Riordain declined to follow the example of Bank of Ireland, however, which was also involved in the deal.

After apologising last week for its involvement with Remnant Media, following protests from Irish women’s groups and the Catholic Church, the Irish bank went on to say it was backing out of its part of the loan.

Bank of Ireland and Bank of Scotland together helped finance a 20 million sale of the top-shelf titles from Mr Desmond’s Northern & Shell company to Remnant Media.

Mr O’Riordain said: "We are sticking by this loan because one of our key principles is to stand by our customers. When we make a promise, we keep it."

The controversy echoes another ill-fated decision by Bank of Scotland, to support American television evangelist Dr Pat Robertson.

He famously described Scotland as a "dark land" where homosexuals, he said, exerted a powerful influence. After a furious backlash, the bank withdraw from the link-up.

A source at the Bank of Scotland said its senior executives had been unaware of the Remnant Media deal until it became public knowledge.

The size of the loan, which by the bank’s standards was relatively small, meant it did not attract any attention outside the lending arm which put the loan together.

The source added: "We certainly won’t be making a lending decision like this again."

Mr O’Riordan said he was not aware of any similar deals on the bank’s books.

He declined to speculate if there would be an impact on bank’s place in the FTSE4Good index, which demands all of its members "contribute to the development of responsible business practice around the world".

He added: "We recognise this decision may have caused offence and embarrassment. We have to recognise that there are many different points of view among our stakeholders."