Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Barclays drew up plans to pull out of future Israeli government bond auctions as it reviewed its exposure to the country under pressure from pro-Palestinian activists, according to people familiar with the matter.
The UK bank, one of seven foreign lenders that help the Israeli government sell new debt, had prepared to leave the market in recent weeks as part of an attempt to quieten criticism about its relations with Israel during the war in Gaza.
On Tuesday evening, after more internal discussions and after being contacted for comment by the Financial Times, Barclays informed Israeli officials that it planned to continue to work as a so-called primary dealer, where it operates alongside other international banks such as Goldman Sachs, JPMorgan Chase and Deutsche Bank.
Yali Rothenberg, Israel’s accountant general, said: “We appreciate the bank’s statement affirming its continued commitment to the State of Israel.”
“It is crucial that leading global financial institutions, such as Barclays, choose to resist boycotting Israel and support its legitimate right to self-defence as a leading western democracy,” Rothenberg added.
Barclays said it was “preparing a response” for Israel’s latest request for bids on its next bond sale, which is due next week.
Israel has sold billions of dollars’ worth of debt to help finance the widening government deficit caused by its war with Hamas, including a record $8bn international bond sale in March.
Israel sent troops into Gaza in response to Hamas’s October 7 attack on Israel, during which militants killed 1,200 people and took another 250 hostage, according to Israeli officials.
However, in recent months Israel has come under fire over the soaring toll of its offensive, which has killed more than 39,900 Palestinians, according to Palestinian officials, and fuelled a humanitarian catastrophe in the enclave.
The British lender has come under increasing pressure from pro-Palestinian activists, who have called for a boycott of the bank over alleged investments in defence companies that supply arms used by the Israel Defense Forces.
A number of the bank’s branches across the UK have been targeted by protesters, with windows smashed or smeared with red paint.
Barclays has previously said it trades in the shares of the companies for clients but does not invest in them directly.
In June, Barclays put on hold planned sponsorships for a number of music festivals after several artists threatened to boycott the events.
Barclays’ review of its Israel business comes amid a broader economic and business fallout from the war. In June, Colombia said that it was suspending exports of coal to Israel in protest over the conflict.
A month earlier, Turkey said it would halt trade with the Jewish state until it allowed an “uninterrupted and sufficient flow” of humanitarian aid to Gaza.
The fighting has also hit Israel’s credit rating, with Fitch announcing on Monday that it was downgrading the country’s debt to A from A-plus, citing geopolitical risks stemming from the war. Moody’s and S&P Global have made similar moves.
However, some investors have rallied behind the country, with some US municipal governments increasing their purchases of Israel bonds as a gesture of support.
Barclays is ranked as the third most active buyer of Israel bonds at auctions among the 12 official primary dealers last year, according to official statistics. But it had fallen to 11th in the three months to the end of June.
Additional reporting by Joseph Cotterill in London
Read the full article here
