PGGM has decided to divest from five Israeli banks because they are involved in financing Israeli settlements in the occupied Palestinian territories, the Dutch pension fund manager has said.

The asset manager said in a statement that the banks' action were a "concern" as the settlements are considered illegal under international law, and it also stated that according to international observers, the settlements "constitute an important obstacle to a peaceful (two-state) solution of the Israeli-Palestinian conflict".

PGGM said that is has been in dialogue for several years with Bank Hapoalim, Bank Leumi, First International Bank of Israel, Israel Discount Bank and Mizrahi Tefahot Bank.

However, PGGM said that engagement will not be effective in this case, because the banks have "limited to no possibilities" to end their financing of the settlements, "given the day-to-day reality and domestic legal framework they operate in".

In its statement, PGGM cited an advisory opinion in 2004 made by the International Court of Justice, which stated that the settlements in the Palestinian territories are illegal and are a breach of the Geneva Convention.

However, Israel disputes this interpretation of the applicability of international law.

First published 09.01.2014

monique_simpson@wilmington.co.uk