The Belgian French bank group Dexia, which specializes in financing municipalities and other local authorities, is refusing to work with Judea and Samaria local councils, Israel Radio reported Wednesday morning.

Sources in the Council of Jewish Communities in Judea, Samaria, and the Gaza Strip told Israel Radio that in several cases, applicants were informed that their loans could not be approved as their localities were situated over the Green Line.

The bank reportedly cited the fear that if an agreement was to be signed between Israel and the Palestinians which resulted in settlements being dismantled, applicants would not be able to repay loans.

Shmuel Reifman, who chairs the Center for Regional Councils, confirmed Israel Radio’s report. He noted that certain entities which do not support Israel were putting pressure on Dexia, and threatening to downsize investments in the company if it continues to extend credit to councils over the Green Line.

The local subsidiary of the company, Dexia Israel, responded to the report by saying that the bank operates solely according to business considerations.

Dexia Israel Bank, formerly Otzar Hashilton Hamekomi and a subsidiary of the French-Belgium Dexia Group, is a specialized bank for Israeli local authorities and financing of municipalities while also providing banking services to the general public including short and long-term credit, receipt of deposits, and current accounts. Based in Tel Aviv with a workforce of 40 employees,

Dexia Israel plays an important role as an intermediary for financial transfers between the state and local authorities. Dexia Israel is the third largest bank in terms of lending to municipalities after Bank Hapoalim and Bank Leumi.

In February 2001, the Dexia Group, a global leader in public sector financing, acquired control of Otzar Hashilton Hamekomi and presently holds 65.31% of the bank’s share capital. Additional shareholders are the Union of Local Authorities. In January last year, Dexia Israel received a full banking license from the Bank of Israel allowing the bank to expand its products and activities in Israel. Sharon Wrobel

Dexia Israel’s decision was reported on various Palestinian Web sites as early as June this year, apparently as the result of a political campaign in Belgium.

One pro-Palestinian site quoted Dexia’s management as saying that funding Judea and Samaria settlements was against the bank’s code of ethics.

Judea and Samaria local council heads called for the bank to be closed down, stating that any company that refused to give loans to settlements should not be allowed to make money from other authorities within Israel.

The leaders also called on Prime Minister Binyamin Netanyahu and Defense Minister Ehud Barak to extend loans to local councils in the West Bank.

Sharon Wrobel contributed to this report