Two Scottish banks helped a North Sea oil firm with links to Israel’s West Bank settlements raise half a billion pounds, The Ferret has found.
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”.
Natwest Group – which was known as the Royal Bank of Scotland Group until 2020 – and Lloyds Banking Group – which is registered on The Mound in Edinburgh – were two of eight global banks which underwrote the Ithaca bonds, according to data from Bloomberg shared with The Ferret.
When a company wants to raise money by issuing bonds, banks act as middlemen by initially buying the bonds and then selling them to investors. This means that the company that issues the bond has insurance if investors do not want to buy the bond. This is known as underwriting.
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.
Ithaca is estimated to be worth £1.4bn and has around 600 employees. It reportedly paid out hundreds of millions of pounds in dividends to its parent company, Delek, in 2023.
Ithaca owns a 20 per cent stake in Rosebank and all of the equity in Cambo. Oil exploration at Rosebank was approved in September 2023, while Ithaca is reportedly evaluating the future of Cambo. Both fields are located off the coast of Shetland.
Companies were included on the 2020 UN list if they were participating in one of ten “listed activities” in the West Bank – including East Jerusalem – which “raised particular human rights concerns” for members of its fact-finding mission.
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.
The West Bank – land located on the west bank of the river Jordan near Jerusalem – has been occupied by Israel since the 1967 Middle East war and has been the site of conflict between Israeli settlers and the Palestinian population for decades.
Settler violence against Palestinians has spiked since the Hamas attack on 7 October which killed around 1200 people, mostly Israeli civilians. Over 28,000 Palestinians have been killed in Gaza by Israeli strikes since the attack.
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.
Western Sahara is currently controlled by Morocco, but its sovereignty over the area is disputed by both the African Union and UN. A dispute over the territory between Morocco and the indigenous Sahrawi people has been ongoing since Western Sahara was first annexed in 1975.
Announcing its divestment from Delek at the end of last year, the Norwegian sovereign wealth fund said the company’s involvement in Western Sahara was a “serious violation” of “ethical norms”.
Natwest and Lloyds’s purported commitment to tackling climate change simply isn’t credible when they’re backing Ithaca, which has put its own profits above everything else.
Tessa Khan, Uplift
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”.
Tessa Khan, director of the climate campaign group, Uplift, said plans to develop Rosebank and Cambo are “fundamentally at odds with the trajectory required for a safe climate”.
She added: “Natwest and Lloyds’s purported commitment to tackling climate change simply isn’t credible when they’re backing Ithaca, which has put its own profits above everything else.”
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.
Featured image thanks to iStock/ronib1979
