European Union settlement ruling could hit Israeli banks' bottom line

Scandinavian funds reduce investment in Israeli banks because of their activity beyond the Green Line.

Bank customer hapoalim370 (photo credit: REUTERS)
Bank customer hapoalim370
(photo credit: REUTERS)
Israel’s banks may fall victim to the European Union decision restricting interaction with Israeli entities beyond the pre-1967 lines, according to information obtained by The Jerusalem Post's sister Hebrew-language publication, Sof Hashavua magazine. At issue are the continued investments of European investment funds in the banks’ securities.
A visiting delegation of Scandinavian analysts to Israel held a special meeting with the management of the Association of the Banks of Israel and requested the particulars of the Israeli banks’ business in the West Bank and the extent of their commercial involvement there.
The meeting was held a few weeks ago according to a source, who said the visiting analysts represented pension and investment funds from Scandinavian countries.
In the course of the meeting it became clear that all of the Israeli banks act either directly beyond the Green Line by way of commercial branches, or indirectly through the financing of building projects there.
According to the source, the analysts subsequently reported these details to their Scandinavian clients who it is believed then acted to reduce their investments in the Israeli banks. 
The Israeli banks, for their part, have not remained complacent in the face of the EU settlement directive.
The legal departments of the Israeli banks requested that the Foreign Ministry  provide them with the details of the EU guidelines so they could assess its consequences on them and weigh their future steps.
The EU was expected to formally publicize its new guidelines on settlements on Friday which would prohibit the funding, cooperation, and the granting of scholarships, grants and prizes to Israeli settlements beyond the Green Line. The EU guidelines are expected to harm the business interests of many bodies that are active in these areas.
In the wake of reports of the EU decision, Deputy Foreign Minister Ze’ev Elkin told Army Radio this week that “investment funds could not be forced to invest” beyond the Green Line. Elkin said investments would be impacted by the decision but he added there were entities who already began to divest prior to the EU settlement decision.

Translated by staff.