ABP, Europe’s largest pension fund, will not divest its holdings in three Israeli banks sold by Dutch pension manager PGGM earlier this year, it has confirmed.

In a statement, the €300bn Dutch public sector fund said it had concluded three financial institutions – Bank Hapoalim, Bank Leumi and Bank Mizrahi-Tefahot – “did not act in breach of international laws and regulations”, adding that there were no existing judicial rulings that should result in their exclusion from its investment universe.

“Furthermore, ABP has concluded that the stipulations in the UN Global Compact have not been violated and do not give cause to start a formal engagement process (that possibly could lead to exclusion),” the statement continued.

The scheme said its investment policy aimed to provide “good and affordable pension for all its participants” and that its resulting environmental, social and governance (ESG) policy therefore was based around two objective reference points of international law and the UN Global Compact.

At the end of September last year, ABP’s holdings in Hapoalim were the fund’s second-largest Israeli shareholding, worth €21m.

Its stake in Leumi was worth €14m, and Mizrahi-Yefahot €2m.

Overall, the fund invested €104m in Israeli equity and bonds.

ABP’s decision to stand by its holdings come after PGGM divested from five Israeli banks – the three held by ABP, as well as First International Bank of Israel and Israel Discount Bank.

Its sale, following prolonged engagement with the financial institutions and the conclusion that they would be unable to cease activities in Palestinian territories, led to a diplomatic row, with the Dutch ambassador to Israel being summoned to explain the move.

Exclusion on grounds of a firm profiting from settlement activities is not unheard of, with the Norwegian Government Pension Fund Global recently re-instating a ban on an Israeli construction company for the same reasons.

ABP recently excluded Japan’s TEPCO – involved in the Fukushima Daiichi power plant accident – over concerns it had little regard for public safety. 

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