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June 20, 2014 11:52 am

Dutch Pension Fund PGGM Reportedly Regrets Divesting From Israeli Markets

avatar by Joshua Levitt

Bank Hapoalim in Jerusalem's Zion Square. Photo: Djampa / WikiCommons.

Bank Hapoalim in Jerusalem's Zion Square. Photo: Djampa / WikiCommons.

Dutch pension fund giant PGGM now regrets a decision in January to divest from five Israeli banks, according to Dutch fund managers cited by the Financial Times, as part of a wider review of how pension funds and fund managers now view the campaign to divest from Israeli companies, or international companies active in the West Bank. As recently as March, PGGM’s parent company, PFZW, defended the decision to divest from Israeli banks, but now the fund is said to regret the move.

The FT said: “A Dutch fund manager, who asked to remain anonymous, believes several senior executives at PGGM now regret excluding the five Israeli banks, after the pension fund unwittingly became the champion for the divestment movement.”

The FT said that both ABP, the biggest Dutch pension fund, and Nordea Investment Management, the Nordic fund house, have since announced that they will remain invested in the Israeli banks, contradicting PGGM’s stance. Norway’s government pension fund also said this month that it has over a $1 billion invested in Israeli equities.

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The Israeli banks that were cut by PGGM are Bank Hapoalim, Bank Leumi, First International Bank of Israel, Israel Discount Bank and Mizrahi Tefahot Bank.

In March, the parent group’s spokeswoman, Ellen Habermehl, told the FT: “The commotion caused by our decision has led us to carefully evaluate our decision-making process on this matter. We have concluded that there is no reason to reconsider this decision.”

But the FT also said that groups, such as Nordea, who will remain invested in Israel also have completed their own analysis and visits and came out with the opposite conclusion:

Nordea spokesman Sasja Beslik told the FT: “Based on the analysis and dialogues we have conducted on the ground with companies and other stakeholders, we have at present not identified any companies currently breaching our investment policy regarding environmental social and governance issues. As usual, we are in continued dialogue with a number of companies in the region.”

The financial newspaper cast the disparate viewpoints as “the latest sign of a growing divide in the institutional investor community over how to apply socially responsible investment principles to companies based in Israel.”

But even more telling was that the FT, via its specialist fund management FTfm report, said it contacted 15 of the world’s biggest fund managers and 10 of the largest global pension funds — 25 financial companies that it covers closely and whose managers it interviews frequently — to get a sense of where they stood on the question of divesting from Israel.

The FT said: “Half declined to comment or said they had no view; the remainder did not respond to requests for comment.”

The UK’s Jewish Chronicle flagged the FT reports on Thursday.

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