ROYAL Bank of Scotland has ruled out investing in a controversial coal port development that could threaten Australia's Great Barrier Reef.

The bank, which is 80 per cent-owned by taxpayers after being bailed out by the UK Government in 2008, is the latest financial institution to state it will not finance expansion of the Abbot Point coal terminal near Bowen, Queensland. It follows similar declarations by HSBC and Deutsche Bank.

The terminal intends to export coal from nine major mines planned for Queensland's Galilee Basin and its expansion will see three million cubic metres of dredged material dumped in the Great Barrier Reef world heritage site.

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Environmental campaigners and scientists fear the dredged material could damage the ecosystem of the reef, with sediment potentially smothering corals and seagrasses and exposing them to pollutants and elevated levels of nutrients.

In a tweet, RBS said: "We are not involved in financing the expansion of Abbot Point & have no plans to be involved in the future."

The move by RBS came as world heritage body Unesco deferred a decision to 2015 on whether to add the Great Barrier Reef to its World Heritage in Danger list. If listed, it would be one of only a handful of world heritage sites in developed countries considered to be in danger.

Unesco said it had asked Australia to submit an updated report on the state of conservation.