Israeli banks: main types of activities in/with the illegal settlements

Israeli banks engaged with the illegal settlements conduct business and generate profits from wrongfully acquired property rights, contribute directly to the maintenance and development of the illegal settlements, and consolidate the illegal situation of Israeli annexation of occupied territory and violation of the right to self-determination of the Palestinian people by:

Providing loans for construction on occupied land 
Israeli banks provide loans to construction companies and individual house builders in the illegal settlements. Israeli banks sign ‘accompaniment agreements’ with construction companies for projects located in the settlements. These agreements create close partnerships between banks and developers from a project’s first stages to its completion. Who Profits (2017) found evidence that Bank Leumi, Bank Hapoalim, Israel Discount Bank, Mizrahi-Tefahot Bank, Bank Igud, FIBI and Bank of Jerusalem are providing these kinds of loans. Israeli banks also provide mortgages to businesses and home buyers in West Banks settlements. 

The banks often become a party to construction projects on occupied land, as the purchased property, both in the case of mortgage loans and accompaniment agreements, is used as collateral for the loan.  The bank then becomes a stakeholder in a settlement property and, in case of foreclosure, it may fully own that property on occupied land.

Servicing and financing Israeli local authorities in the occupied West Bank and the Golan Heights 
Regional councils, local councils and municipalities of Israeli settlements in the occupied West Bank and the Golan Heights form part of Israel's system of local government and administer the settlements.  These authorities depend on financial services provided by Israeli banks. Israeli banks with no exception have provided loans and financial services to local and regional councils of Israeli settlements in the West Bank between 2010 and 2017. 

Operating branches in Israeli settlements 
All commercial Israeli banks, with the exception of Dexia Israel and Igud Bank have branches or branches of subsidiaries in the settlements. Through these branches Israeli banks participate directly in the settlement economy and provide essential financial services to residents of the settlements. In the occupied West Bank, Palestinians are excluded from the services in these branches because they are prohibited from entering the settlements.

Sustaining and benefiting from the captivity of the Palestinian market 
Israeli banks contribute to and benefit from the captivity of the Palestinian financial and economic market in several ways. As Palestinians may not print and use their own currency, the Israeli shekel dominates the Palestinian economy. As such, Palestinian banks must rely on Israeli banks for the transfer of funds and Shekel clearing services. According to official Palestinian sources, Israeli banks demand high cash collaterals for these services, charge high commissions and pose limitations on money transfers.

In addition, Israeli banks cooperate only with some Palestinian banks, refusing to work with newly established banks. Israeli banks have also stopped services to Palestinian banks in the occupied Gaza Strip, bringing the financial market in Gaza to the brink of a total collapse. 

For more information see Who Profits (2017) and Human Rights Watch (2018) 

Responsibilities of international banks and states
International banks with shareholdings in or other exposure to Israeli banks lack the leverage to prevent or mitigate the adverse human rights impacts of business with the illegal Israeli settlements. This is due not only to the deep and direct involvement of Israeli banks in the illegal settlements, but also because the illicit property rights and titles created by the settlement economy from which revenues are generated, and the violations of international law underpinning it, are anchored in Israeli law and a matter of Israeli governmental policy. 

Following this, international banks must abstain from or end their relationships with Israeli banks, institutions and businesses linked to the illegal settlements. They cannot meet their responsibility to respect human rights unless they do so.

In 2013, a Human Rights Council fact finding mission recommended that “private companies must assess the human rights impact of their activities and take all necessary steps – including by terminating their business interests in the settlements – to ensure that they do not have an adverse impact on the human rights of the Palestinian people”, as well as calling on states to adopt measures to ensure that enterprises will do so (see Paragraph 117 of the mission's report).

In March 2016, the Human Rights Council instructed the Office of High Commissioner for Human Rights (OHCHR) to establish a database of enterprises engaged in business with the illegal settlements as a necessary step for the implementation of this recommendation. According to OHCHR’s first progress report issued in January 2018, 206 companies were screened and included in the database; their names will be publicized upon completion of verification.