Barclays planned to pull out of Israel bond auctions under pressure from activists

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Barclays has drawn up plans to pull out of future Israeli government bond auctions as it reviews its exposure to the country under pressure from pro-Palestinian activists, according to people familiar with the matter.

The British bank, one of seven foreign lenders helping the Israeli government sell new debt, had been preparing to exit the market in recent weeks as part of a bid to quell criticism over its dealings with Israel during the Gaza war.

On Tuesday evening, after more internal discussions, Barclays informed Israeli officials that it plans to continue working 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 critical that global financial institutions like Barclays choose to resist boycotting Israel and uphold its legitimate right to self-defense as a leading Western democracy,” added Rothenberg.

Barclays said it was “preparing a response” to Israel’s latest bid for its next bond sale, due next week.

Israel has sold billions of dollars worth of debt to help finance a growing government deficit caused by its war with Hamas, including a record $8 billion sale of international bonds in March.

Israel sent troops to Gaza in response to the October 7 Hamas attack on Israel, during which the militants killed 1,200 people and took another 250 hostage, according to Israeli officials.

However, Israel has come under fire in recent months over the growing toll of its offensive, which has killed more than 39,900 Palestinians, according to Palestinian officials, and fueled 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 defense companies that supply weapons used by the Israel Defense Forces.

A number of UK bank branches were targeted by protesters, with windows smashed or smeared with red paint.

Barclays has previously said it trades the companies’ shares for clients, but does not invest in them directly.

In June, Barclays suspended planned sponsorships of a number of music festivals after several artists threatened to boycott the events.

Barclays’ review of its Israeli business comes amid wider economic and business fallout from the war. In June, Colombia said it was suspending coal exports to Israel in protest of 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 hurt Israel’s credit rating, with Fitch announcing on Monday 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 made similar moves.

However, some investors have rallied behind the country, with some US municipal governments increasing their purchases of Israeli bonds as a gesture of support.

Barclays is ranked as the third most active buyer of Israeli bonds at auctions among the 12 official primary dealers last year, according to official statistics. But it fell to 11th place in the three months to the end of June.

Additional reporting by Joseph Cotterill in London