The Co-operative Bank is boycotting some sovereign wealth funds because of the human rights records of their controlling regimes, it revealed yesterday.

Last year the bank turned away £10 million of loan applications from three businesses controlled by sovereign wealth funds whose sponsoring regimes it deemed unethical.

It declined to name the funds, but those on its blacklist are thought to include multibillion-dollar funds controlled by Saudi Arabia, Dubai, Qatar and China.

Twelve of the 20 biggest sovereign wealth funds are controlled by regimes deemed to be “not free” by Freedom House, the organisation used by the bank that attempts to measure political freedom and civil liberties across the globe.

Co-op Bank, which has turned down business on ethical or environmental grounds since 1992, said that it was responding to the growing scale and reach of such funds.

Barry Clavin, the ethical policies manager, said: “It's going to be a big issue going forward. Our policy precludes us from investing in an oppressive regime or in businesses and investments owned by an oppressive regime.”

Any business more than 20 per cent-owned by a blacklisted sovereign wealth fund would be turned down for business, Mr Clavin said.

Sovereign wealth funds are government-controlled, often awash with cash from oil or other commodity revenues, that invest in largely Western assets.

In the past, most of the money went into ultra-safe assets, such as US government bonds, but increasingly the funds are investing in blue-chip companies, with the London Stock Exchange, P&O Ports, Barclays and J Sainsbury among those targeted recently.

Co-op Bank, which is part of the wider Co-operative financial services group, said that it had sacrificed a total of £14 million in revenues last year by turning away business for ethical or ecological reasons. That was up from £11.7 million in 2006.

Business shunned for human rights reasons accounted for 37 per cent of the revenues forgone, animal welfare another 30 per cent and the environment 25 per cent.

Other potential customers turned down last year included an oil company seeking finance to make PVC and a flooring company whose products contained vulnerable tree species.

David Anderson, the bank's chief executive, said: “These figures clearly demonstrate that, despite tightening markets, there has been no relaxation in the implementation of the bank's ethical policy, and we continue to turn business away that conflicts with our customers' concerns.”

He said that some of the bank's 65,000 corporate customers chose it precisely because it was prepared to turn away certain kinds of business.

Co-op Bank uses customer questionnaires to decide which ethical policies to pursue. About 70,000 customers took part in the last big survey, in 2001.

The bank's ethical policy unit screened 348 potentially problematic transactions during the course of the year.

Of these, 32 were found to conflict with its policy, compared with 29 in 2006.

The bank normally keeps confidential the names of customers turned down for business.

Occasionally, however, blacklisted customers protest publicly, such as Christian Voice, an evangelical group, whose account was closed by Co-op Bank in 2005 because of its anti-homosexual campaigning.

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