European investors worth a combined $490 billion are reviewing their holdings in Israeli banks over concerns they are being used to fund Israeli settlements.

Pension funds ABP and KLP and fund houses Nordea Investment and DNB have requested more information from the banks about their involvement in financing settlements.

A spokesperson for KLP said: “Dilemmas linked to financing [of Israeli settlements] will be discussed at KLP.”

European governments and the EU have repeatedly expressed their concern that the continued expansion and development of West Bank settlements will torpedo the peace process.

Two weeks ago, the second-largest Dutch pension fund PGGM became the first big investor to pull its funds from five large Israeli banks.

A spokesperson for PGGM said: “Given the day-to-day reality and domestic legal framework they operate in, the banks have limited to no possibilities to end their involvement in the financing of settlements in occupied Palestinian territories.

“Therefore it was concluded that engagement as a tool to bring about change will not be effective in this case.”