TORONTO — Scotiabank's 1832 Asset Management has substantially cut back its holdings in Israeli arms manufacturer Elbit Systems Ltd. as the bank has faced calls to divest over the war in Gaza.
Securities filings show the asset manager had about 642,000 shares in Elbit at the end of the second quarter, worth some US$113 million, down from about 2,237,000 shares worth US$467.4 million a year earlier.
1832 Asset Management has been steadily reducing its shareholdings in recent quarters to leave it with about 1.44 per cent of Elbit's total shares, down from a little over five per cent last year.
Scotiabank has faced significant pressure for its subsidiary to reduce holdings in Elbit because of the company's role in supplying weapons for the war in the Gaza Strip, which began after Hamas launched an attack on Israel in which 1,200 were killed and about 250 taken hostage. Israel's retaliatory siege, bombardments and ground attacks have left more than 39,000 Palestinians dead, says the territory's health ministry.
Protesters calling for divestment have staged sit-ins at Scotiabank's headquarters and disrupted speaking events of chief executive Scott Thomson, while artists have also protested Scotiabank sponsorships including pulling their books from the bank-supported Giller Prize.
Scotiabank said that the pressure has not influenced the investment decisions of its subsidiary.
"Individual securities are held based on their investment merit and are not influenced by protest activity," the bank said in a statement.
Scotiabank has also explained that the bank does not directly hold the shares, and it cannot interfere in the independent investment decisions of its portfolio managers, including at 1832 Asset Management.
The bank says holdings will fluctuate over time as portfolio managers look to deliver strong risk-adjusted returns.
Filings show 1832 Asset Management held 2.23 million shares at least as far back as Dec. 31, 2021, when Elbit shares hadn't topped US$175 on the Nasdaq. Shares have since traded as high as $244 and currently trade at around $196.
Elbit noted in its most recent results that it had a 12 per cent increase in revenue compared with a year earlier as it saw high demand for its products, including "material increased demand" from the Israel Ministry of Defense.
This report by The Canadian Press was first published Aug. 14, 2024.
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