Appreciate this article? +972 depends on your support.

Click here to help us keep going

Analysis News
Visit our Hebrew site, "Local Call" , in partnership with Just Vision.

Tel Aviv bank index drops following think tank report on settlements

The European Council on Foreign Relations publishes a paper recommending the EU take measures against financial institutions that do businesses in the West Bank. Israeli bank stocks dip shortly after Israeli media quoted a Reuters article on the report.

The degree of nervousness in Israel over potential future sanctions against local companies that do business in the settlements was evident for all to see Tuesday. Publicity surrounding an EU think tank report on the topic caused the Tel Aviv banking index to drop 2.3 points in less than an hour (a total of 2.46 points for the day).

The report, published by the European Council on Foreign Relations, included a series of recommendations intended to create a distinction between formal EU-Israeli ties and those that create complicity in its settlement activities in the West Bank. It put a special emphasis on the banking system. (Read the full report below.)

According to the reports’ authors, Hugh Lovatt and Mattia Toaldo, “differentiating between Israel and its settlement activities within the EU’s bilateral relations is one of most powerful tools at the EU’s disposal for challenging the incentive structure that underpins Israeli support for the status quo.”

The report recommends the European Commission “task its directorates general with reviewing their existing interactions with Israel to assess whether differentiate between Israel proper and the settlements.” A special emphasis is placed on the banking system, which conducts financial activities in the settlements — mostly mortgages and loans — but also has many interests in Europe.

The ECFR has no formal capacity within EU institutions, but the alarm bells in Israel rang nonetheless. A Reuters piece on the report was picked up by the local media and published by Ynet at 1:03 p.m. Shortly thereafter, the Tel Aviv Stock Exchange’s banking index took a dive. The Israeli media was quick to connect the drop to the news items on the report.

The drop in the banking stocks on July 22, 2015 (Source: Calcalist.co.il)

The drop in banking stocks on July 22, 2015 (Source: Calcalist.co.il)

The three major Israeli banks — Hapoalim, Leumi and Discount — lost 2.6-2.7 percent each. They also had led the day in trade volume.

Sources in the banks dismissed the report, stating that it carries no formal weight. The Israeli Foreign Ministry declined to comment on the matter for the same reason. The market, however, sent a different signal. And while the stocks may rise again tomorrow, the unexpected drop revealed how worried the Israeli business community is about international measures against the occupation, especially those connected with the financial system.

However, a source in the banking system told the financial daily Globes that this could turn out to be the greatest threat to the Israeli banks — even more than the reform the government intends to implement.

Newsletter banner

Before you go...

A lot of work goes into creating articles like the one you just read. And while we don’t do this for the money, even our model of non-profit, independent journalism has bills to pay.

+972 Magazine is owned by our bloggers and journalists, who are driven by passion and dedication to the causes we cover. But we still need to pay for editing, photography, translation, web design and servers, legal services, and more.

As an independent journalism outlet we aren’t beholden to any outside interests. In order to safeguard that independence voice, we are proud to count you, our readers, as our most important supporters. If each of our readers becomes a supporter of our work, +972 Magazine will remain a strong, independent, and sustainable force helping drive the discourse on Israel/Palestine in the right direction.

Support independent journalism in Israel/Palestine Donate to +972 Magazine today
View article: AAA
Share article
Print article
  • LEAVE A COMMENT

    * Required

    COMMENTS

    1. Average American

      What’s wrong with markets and investors reacting to this? What’s wrong with them treating Israel proper differently from occupied territory? They are different, under different laws, different risk levels. Don’t know if you noticed, but to everyone else in the world the “settlements” are illegal, and annexing Area C would also be illegal.

      Reply to Comment