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In 2001 Dexia Group bought the Israeli Municipality Treasure Bank and established Dexia Israel. Dexia Israel has been giving long-term loans to municipalities of Israeli settlements in the occupied territories.

According to statements made by the CEO of the bank, since 2005 the bank has given long-term loans and other financial services to more than ten different Israeli municipalities in the occupied West Bank, including: Ariel, Elkana, Alfei Menashe, Har Hebron (South Hebron Hills), Kdumim and Giv'at Zeev.

In 2009, Dexia Israel issued a 6.8 million NIS loan for waste management systems in the settlement of Bat Ayin. The loan is given from state funds through the administration for sewage infrastructures.  

Dexia Israel provided a guarantee for a project of the Israeli Ministry of Defense to purchase and install lighting around Kdumim settlement.  

Dexia Israel provides fund management for several settlements: Gush Etzion settlements' regional council receives all of its state funds through Dexia Bank; The bank operates the account of Katzrin settlement in the Golan Heights. Katzrin receives funds from the different government offices through Dexia Bank.

All Mifal HaPayis (Israeli national lottery) grants given to settlements for construction of buildings and facilities are transferred through Dexia Israel bank. Between 2010-2013 Mifal HaPayis provided grants to the following settlements: Alfei Menashe, Alon Shvut, Ariel, Atniel, Beit El, Beitar Illit, Bney Yehuda (Golan Heights), Dolev, Efrat, Elazar (Gush Etzion), Elkana, Eshkolot (South Hebron Hiils), Etz Efraim, Geva Binyamin (Adam), Givat Ze'ev, Har Hadar, Har Hevron, Hagay, Hinanit, Hashmonaim, Imanuel, Itamar, Kalia, Karney Shomron, Katzrin (Golan Heights), Kdumim, Kfar Adumim, Kiryat Arba, Kohav Hashahar, Ma'ale Adumim, Ma'ale Efraim, Mevo Beitar, Mevo Horon, Modi'in Ilit, Neveh Daniel, Nili, Nofim, Ofra, Oranit, Peduel, Settlement neighborhoods in East Jerusalem, Shilo, Yakir.  

In addition, between 2010-2013, grants were given to the following Regional councils in the OPT: Bik'at Hayarden (The regional council of the occupied part of the Jordan Valley), Megilot Dead Sea regional council, Har Hevron, Mate Binyamin, Gush Etzion and Shomron. Grants were also given to Golan regional council in the Golan Heights.

The bank benefits from access to the Palestinian monetary market as a captive market.

Following public campaigns led by the Belgian Intal group the bank announced in June 2009 that financing Israeli settlements is contrary to the bank’s code of ethics, and that since September of 2008 it has not provided new loans to West Bank settlements. However, contrary to this announcement, it has continued providing loan to local and regional councils of settlements after September 2008. Dexia Group has announced its intention to sale the Israeli bank, yet as to August 2013, the sell was not finalized.