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Norway's Council on Ethics looks at five largest Israeli

banks

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Review could prompt wealth fund to divest up to $500

million

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Airbnb ( ABNB ), Expedia ( EXPE ), Booking, TripAdvisor ( TRIP ) deemed investable

By Gwladys Fouche, Stefania Spezzati and Steven Scheer

OSLO/LONDON/JERUSALEM, June 3 (Reuters) - The ethics

watchdog for Norway's $1.9 trillion wealth fund is scrutinising

Israeli banks' practice of underwriting Israeli settlers'

housebuilding commitments in the occupied West Bank in a review

that could prompt up to $500 million in divestments.

The Council on Ethics, a public body set up by the Ministry

of Finance, has, however, decided not to object to the Fund's

investments in accommodation platforms such as Airbnb ( ABNB )

that offer rentals in the Jewish settlements.

The body checks that firms in the portfolio of the world's

largest wealth fund meet ethical guidelines set by Norway's

parliament.

In an interview with Reuters on May 22, Council head Svein

Richard Brandtzaeg said it was examining how Israeli banks offer

guarantees that protect Israeli settlers' money if the company

building their home in the West Bank should fold.

Other practices are also being looked at "but this is

what we can see so far", he said. "That is what is well

documented." He declined to say how long the review would take.

Brandtzaeg did not name the banks but, at the end of 2024,

the fund owned about 5 billion crowns ($500 million) in shares

in the five largest Israeli lenders, up 62% in 12 months,

according to the latest data.

The banks - Hapoalim, Bank Leumi, Israel

Discount Bank, Mizrahi Tefahot Bank and

First International Bank of Israel - did not answer

requests for comment.

Since 2020, they have been included in a list of companies

with ties to settlements in the occupied Palestinian territories

compiled by a U.N. mission assessing the implications for

Palestinian rights.

Latterly, investor concern has grown around the world over a

19-month-old Israeli onslaught that has killed more than 50,000

Palestinians and devastated the Gaza Strip in response to an

attack by Hamas militants that killed more than 1,200 Israelis.

Around 700,000 Israeli settlers live among 2.7 million

Palestinians in the West Bank and East Jerusalem.

Many settlements are adjacent to Palestinian areas and some

Israeli firms serve both Israelis and Palestinians.

The United Nations' top court last year found that Israeli

settlements built on territory seized in 1967 were illegal, a

ruling that Israel called "fundamentally wrong", citing

historical and biblical ties to the land.

ACCOMMODATION RENTALS IN WEST BANK SETTLEMENTS

In mid-2024, the Council on Ethics began a new review of

investments linked to the West Bank and Gaza.

It examined 65 companies but recommended only petrol station

chain Paz and telecoms company Bezeq for

divestment, resulting in share sales.

The Council also scrutinised some multinationals to see if

their activities in the West Bank met its guidelines.

Among them were the accommodation platforms, including

Airbnb ( ABNB ), Booking.com, TripAdvisor ( TRIP ) and

Expedia ( EXPE ), named on the U.N. list and accounting for

about $3 billion in Fund investments.

But the Council will not recommend watchlisting or divesting

from those, Eli Ane Lund, head of its secretariat, said in the

joint interview.

"The company's activity must have some kind of influence on

the (ethical) violations," she said. "It's not (enough) to have

a connection, it has to have something to do with the

violation, it must contribute to it."

The Council's recommendations go to the central bank, which

is not obliged to follow them but generally does.

If investments are sold, it is done gradually to avoid

alerting markets, and the decision is then made public.

Pro-Palestinian campaigners say the Council sets its bar too

high for recommending divestments, and that the Norwegian

government should instruct the fund to conduct a general

divestment from Israel just as it did for Russia in 2022, three

days after Moscow invaded Ukraine.

But most lawmakers support the Council's approach, and are

set on Wednesday to formally endorse a parliamentary finance

committee's decision not to order a wholesale boycott.