Wall Street Journal - May 8, 2006
Charles Fleming, charles.fleming@wsj.com

Redlining -- or the practice of refusing people bank loans based on their address -- has long been outlawed in the U.S. as discriminatory. But in Europe, although many countries are facing increasingly tense relations with their minority populations, there has been little debate about how financial discrimination -- ranging from redlining to setting higher insurance rates -- affects immigrants seeking to better integrate. Critics say that unless this changes, Europe will struggle to assimilate its already alienated immigrant population.

In the U.S., the Community Reinvestment Act, enacted in 1977, requires banks to lend in low-income neighborhoods. U.S. bank regulators also collect data annually on mortgage lending and can take action against lenders that discriminate on the basis of race or gender. While nearly all segments of society in the U.S. have access to credit, critics of the banking industry say minorities sometimes are charged unfairly high interest rates. [Late Arrivals]

As in the U.S., European countries have enacted laws against racial discrimination, including two European Union legal directives that obliged all 25 EU member states to set in place antidiscrimination laws and official watchdog authorities by 2005. But few of those laws address access to financial services specifically, leaving several gray areas.

"This is starting to emerge as an issue here, but it needs more attention," says Beate Winkler, director of the EU's Monitoring Centre on Racism and Xenophobia in Vienna. The approach to immigrants by many European banks and insurers stands in contrast to how they are treated in the U.S. and the United Kingdom, where banks have identified immigrant communities as a growth area. Some practices elsewhere in Europe legally treat immigrants differently from nationals.

In Ireland, some banks ask African immigrants to take an HIV test for a life-insurance policy as part of a housing-loan package. Benedicta Attoh, a 36-year-old Nigerian-born shop owner in Louth, outside Dublin, says she and her husband didn't question their bank's request for the tests in 2004, until almost a year later when they learned that Irish nationals didn't have to take them. Ms. Attoh submitted a complaint to the Equality Authority of Ireland but has since been told that the complaint came more than the statutory two months after the incident.

Ms. Attoh's bank, Allied Irish Banks PLC, denies that the HIV tests constitute racial discrimination. "We request HIV tests of persons, regardless of nationality, who have lived for a period of time in a country where there is a high prevalence of HIV" such as Nigeria, says AIB spokesman Ronan Sheridan. He declined to specify which countries qualify when it comes to HIV screening for clients.

Niall Crowley, chairman of the Irish Equality Authority, a government antidiscrimination agency, said he was aware of complaints relating to the HIV tests but said it wasn't possible to determine whether the tests were legal under Irish law until a first case is heard by the Irish Equality Tribunal. No such case has yet to be scheduled.

In France, where disaffected North and West African immigrant youths rioted nationwide last fall, the government has introduced numerous measures to help speed up integration. But the national Constitutional Court overruled an official consumer-rights watchdog when it sought to stop credit companies from classifying customers as European or non-European when assessing their creditworthiness.

In Switzerland, which isn't a member of the EU, insurance companies can legally set different rates for foreign-born clients -- for instance, those from Eastern or Southern Europe. Pjeter Lukaj, who arrived in Switzerland as a refugee from the former Yugoslav region of Kosovo 12 years ago, says his auto-insurance costs are as much as 40% higher than those of his Swiss counterparts. "Of course it's racial discrimination," says the 30-year-old Kosovan.

Renata Tschudi Lang, a spokeswoman for his insurance firm Winterthur Group, a unit of Credit Suisse Group, says the company "found that damage claims for certain nationalities are above average." Customers born in those countries, who haven't taken Swiss nationality, are charged some 40% more than new customers from the lowest-risk category, she said.

Immigrant rights' activists have protested, but the Swiss government has ruled that such discrimination is constitutional.

In the wake of the 2001 race riots in Yorkshire, England, the Bradford City Metropolitan District Council focused on access to financial services as a key to better integration of minorities, earning praise from race-relations experts like the EU's Ms. Winkler.

In the Netherlands, where the 2004 murder of filmmaker Theo van Gogh by an Islamic militant made immigration and integration a hot electoral issue, the Dutch government also is starting to focus on immigrants' access to finance. The finance minister has reiterated a formal request to the Dutch banking association, first made in 2003 but never implemented, to explicitly banning the practice of denying loans based on post codes.

**James R. Hagerty contributed to this article.

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