David Bender said he was “shocked” when he received the letter with his new credit card, describing the Israeli city as “Palestine Territory, Occupied” in the address line.
Mr Bender, 75, originally from Manchester, said he feared it was a “conscious and cold” act of antisemitism by someone who had access to his personal data.
But the bank blamed human error on the part of an employee who was “confused” and “ignorant” about the geography of the region and said it was not a malicious act.
They said the mistake was made in August – before an attack by Hamas which left 1,400 Israelis dead – and that the letter had been sent before they could rectify it.
Halifax apologised for the “regrettable” mistake and said the employee in question would be given the “right training” to ensure similar mistakes are not made in the future.
Mr Bender told the PA news agency: “Most of the population don’t even know where Israel and Palestine is.
“Was this a clerical error, stupidity, or something more sinister? I’m not convinced yet.”
A spokesman for Halifax said: “We’ve investigated and can confirm this was due to an individual human error, which was corrected in August.
“We are sorry for any upset caused and are contacting our customer to apologise for the mistake.”
The incident comes amid a steep rise in reports of antisemitism in the wake of the conflict which has left many British Jews fearing for their safety.
Protests across the country have seen chants of the controversial slogan “from the river to the sea, Palestine will be free”, which is interpreted by some as a call for the destruction of Israel from the river Jordan to the Mediterranean sea, where Tel Aviv is situated.
Mr Bender said he now felt safer in Israel than in the UK, adding: “I lived in England when it was a benign place to be and it isn’t any more.
“The England I miss doesn’t exist any more. I can’t remember anything approaching what is happening.”