Banks linked to illegal Israeli settlements

Between 2018 and May 2021, 672 European financial institutions, including banks, asset managers, insurance companies, and pension funds, have financial relationships with 50 businesses that are actively involved with illegal Israeli settlements, according to the DBIO's new report. 

These financial institutions provided US$114 billion in the form of loans and underwritings and held investments to the amount of US$141 billion in shares and bonds of these companies during this period. Amongst them are major UK banks.

What are illegal Israeli settlements?

Under international law, Israeli settlements, their maintenance and expansion are illegal and comprise a number of acts that amount to war crimes and crimes against humanity. 

The settlement enterprise has resulted in a myriad of human rights violations against the Palestinian population. Israel has evicted Palestinians from their homes and created coercive environments that force displacement. The Israeli government has also introduced discriminatory planning and zoning policies in the Occupied Palestinian Territory (OPT) and demolished houses to facilitate the creation and expansion of settlements. The settlements are also accused of rendering sustainable and independent social and economic development for Palestinians in the OPTs impossible to achieve. 

The maintenance and growth of the settlements would not have been possible without private actors, including businesses and financial institutions. The companies listed in the report have facilitated the establishment, maintenance and expansion of Israeli settlements. 

Business enterprises, including financial institutions, that are directly or indirectly involved in the Israeli settlement enterprise run a high risk of involvement in violations of international law and potential complicity in war crimes and crimes against humanity - including through finance, insurance, and trade with partners, suppliers and subsidiaries.

Which banks and companies are involved with Israeli settlements?

The DBIO report highlights the top ten European creditors in companies involved in Israeli settlements, with French bank BNP Paribas coming out on top, having provided these companies with US$17.30 billion in loans and underwriting between 2018 and May 2021, and Germany’s Deutsche Bank coming a close second, having provided US$412.03 billion.

Two major UK banks, HSBC and Barclays, are next on the list, providing US$8.72 billion to 17 companies (HSBC), and US$8.69 billion (Barclays). Santander was the seventh largest financier, having provided US$4.75 billion.

Barclays, the fourth largest creditor, provides loans and underwriting to more than 16 different companies worldwide directly related to Israeli illegal settlements, including Airbnb, Tripadvisor and eDreams, which are seen as key players in the aggravation and extension of the settlement enterprise. Other companies that received loans from Barclays include Altice Europe, which provides technical services of telecommunication, and building services companies Caterpillar (CAT) and HeidelbergCement. Those companies play a direct logistical role in the expansion of illegal settlements as they are engaged in the construction of these settlements.

What should banks and financial institutions do?

Israeli settlements are illegal under international law, as is their maintenance and expansion, and they comprise a number of acts that amount to war crimes and crimes against humanity: banks and businesses therefore put themselves at high risk of grave violation accusations or even being taken to court when they do not properly assess their investments. 

Recently, several financial institutions and companies have taken up their responsibility by divesting from business enterprises linked to Israeli settlements.

The two most recent and important examples are those of Kommunal Landspensjonskasse (KLP) and the Norwegian Government Pension Fund Global (GPFG). KLP is Norway’s largest pensions company, who in July 2021, divested from 16 companies linked to Israel’s settlement enterprise. In a similar vein, GPFG announced in September 2021 that it will exclude three companies that are actively involved with Israeli settlements. The 19 companies excluded by KLP and GPFG were listed in the UN database of businesses involved in certain activities relating to Israeli settlements in the OPT, which was mandated by the Human Rights Council in 2016, and published in February 2020.

These businesses, creditors and investors have a responsibility to ensure that they are not involved in violations of international law and or complicit in international crimes, and to address any negative human rights impacts arising from their business activities and financial relationships.

International financial institutions, including banks and pension funds, have a responsibility to use their leverage to ensure their investee companies act responsibly and inline with international law standards, and to divest from those who are unable or unwilling to do so. Where financial institutions do divest, they must do so in a responsible manner and ensure that human rights are protected throughout the process.