"Scots banks helped oil firm linked to Israeli settlements raise £500m"

Edinburgh-headquartered Natwest and Lloyds were both underwriters on a £500m bond issuance by North Sea oil firm Ithaca Energy in July 2021.

The previous year, Ithaca’s parent company, Tel-Aviv-based Delek Group, was named on a UN list of 112 companies whose activities in the West Bank “raised particular human rights concerns”.

The list was compiled after a UN fact finding mission to investigate the impact of the settlements – considered illegal under international law – on Palestinians. 

Delek reportedly owns petrol stations in the settlements and has previously signed a multi-million-pound contract to provide fuel to the Israeli Ministry of Defence and the Israel Defence Forces (IDF).

Delek owns 89 per cent of Ithaca, which has stakes in both Cambo and Rosebank, the two most controversial untapped oil fields in the North Sea. 

Applications to develop both fields have been opposed by UK climate campaigners in recent years, including in the run-up to the COP26 climate conference in Glasgow in November 2021. Natwest was one of the main sponsors of COP26.

Climate and human rights groups said Natwest and Lloyds should not be backing “environmentally reckless” North Sea oil companies at all, and argued Ithaca’s links to Israeli settlements “makes matters even worse”...

Banks earn a fee from the company for underwriting their bonds. Bond underwriting is an important revenue stream for investment banks, but they have increasingly faced scrutiny for the “hidden” support the process provides to fossil fuel projects worldwide as the climate crisis intensifies.

It was estimated last year that European banks have helped fossil fuel companies raise more than a trillion dollars through underwriting since the Paris climate agreement was signed in 2015...

Delek was named because the UN mission determined it was involved in two of these activities in the settlements; the provision of services and utilities to support the maintenance of Israeli settlements, and the use of natural resources “in particular water and land” for business purposes.

An updated version of the list was released in 2023, with Delek still named as supporting the settlements...

Some financial institutions have sold their shares in Delek in recent years in part due to its ties to Israel’s settlements. It was also criticised after another of its subsidiaries signed a deal with Morocco to develop gas fields off the coast of the disputed territory of Western Sahara...

Neil Cowan, programme director for Amnesty International in Scotland, said Natwest and Lloyds’ claims about social and corporate responsibility “ring hollow” in light of the revelation about their relationship with Ithaca. 

“Banks shouldn’t be lending their financial support to environmentally reckless fossil fuel extraction in the first place, and the deal’s links to Israel’s illegal settlements in the occupied Palestinian territories makes matters even worse,” Cowan told The Ferret. 

Cowan said that any North Sea oil firm with links to the settlements should lose their licence, and that the banks should “immediately cut” any remaining ties with Ithaca or “risk being linked to human rights abuses”...

A Natwest spokesperson said: “We don’t comment on individual clients, however we can confirm that our publicly available role on the bond issue met with our policies for the sector”.

The bank has committed to halve the impact of its funding activity by 2030 and reach net zero by 2050. It has also pledged £100bn of climate and sustainable funding between 2021 and 2025. 

Natwest also published a list of criteria for financing oil and gas companies earlier this month which ruled out funding of a range of firms including those linked to human rights violations.

Lloyds declined to comment. It has also said it will reach net zero by 2050 or sooner and claims to be a leading supporter of UK renewable energy, sustainable farming, and low carbon transport.

Both Ithaca Energy and its parent company, Delek, were asked to comment.