The group, Lloyds and Midland Boycott (Lamb), is seeking to get its views adopted by the National Union of Students and is reminiscent of the student protests of the Seventies and Eighties against Barclays' involvement in apartheid South Africa.
Lamb takes issue with the amount of Third World lending Lloyds and Midland are involved in and wants to see them adopt more "ethical" lending stances. Its planned protests over coming weeks include an "ethical arrest", where students will close down an unspecified bank branch, and a "mock lottery", where fake fruit machines stationed outside branches will illustrate its view that the banks are "gambling" by allegedly financing arms sales to authoritarian regimes and environmentally unfriendly projects.
As well as the planned protests, Lamb will mail out leaflets and put them in freshers packs at up to 30 student unions, with posters and adverts in student handbooks to orchestrate the campaign.
Lamb believes that its actions could lose Lloyds and the Midland many millions of pounds of future profits by dissuading students from opening accounts.
Hugh Sims, spokesman forLamb, and general-secretary of Manchester University student union, says unless the banks bow to the students' demands for Third World debt remission, new ethical lending policies that do not support corrupt regimes or the arms trade, as well as lending on sound environmental principles, they could lose 10 per cent market share in at least 10 large student unions.
Lamb policies have already won the support of the National Union of Students (NUS) higher education sector committee. The group hopes to get the NUS national council to adopt Lamb's policies, which means that a boycott of Lloyds and the Midland could be NUS national policy by spring next year.
Lamb's leaflets will seek to persuade students to see beyond the freebies and competitive overdrafts on offer. The group has compiled information on the ethical stance of the major players in the student market in a publication called Ethical Update and rates each lender based on information received.
Not surprisingly perhaps, both Lloyds and Midland score lowest. Lloyds' Third World debt exposure is pounds 1.9bn. Midland has more than pounds 1bn exposure.
The publication claims that most of this money is invested in the countries in South America that have the highest child mortality rates.
Lamb also alleges that Lloyds has underwritten the sale of Alvis light tanks to Indonesia; that it is Vickers' bankers (suppliers of tanks to Nigeria); that it is a major banker for the British arm of Shell, which has attracted criticism over the destruction of the Ogoni homelands in Nigeria; and that it is the principal banker to Costain, the construction company that won the contract to build the Newbury bypass. Lloyds would not confirm or deny these allegations, but said that companies such as Costain would bank with a number of institutions.
Lamb accuses the Midland of financing Indonesia's purchase of arms used against the East Timorese as well as the sale of attack helicopters to Turkey. Amnesty International recently reported that helicopters are used to commit human rights violations against Turkish civilians.
Midland said the allegations were "not new", but would not confirm or deny them. Both banks said they complied with government export guidelines.
Lamb gives higher ethical ratings to the other UK banks (plus the Halifax), with the Co-operative Bank, which uses an ethical lending policy as a marketing tool, coming out the best.
The Co-op claims to be making progress in the student market with a 5 per cent share, compared with 3 per cent overall. This is despite falling far short of the other banks in terms of freebies and special incentives and the Co-op's dearth of branches. Both Lloyds and the Midland say they have not seen a noticeable affect on student account numbers so far as a result of Lamb's campaigning.
Dido Sandler works for the specialist publication `Financial Adviser'Reuse content