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Bank Hapoalim ordered to postpone break with Gaza
Bank of Israel orders Hapoalim to hold off on implementing decision, pending PMO finding a solution to Strip's imminent cash flew problem
The Bank of Israel on Wednesday ordered Bank Hapoalim to postpone its planned financial break with the Gaza Strip.
Bank Hapoalim decided to cut all financial ties with the Strip in late September, following the security cabinet's decision to declare Gaza a "hostile entity".
Breaking Ties
Israel's biggest commercial bank says it is severing business ties with Palestinian banks in Strip in response to government's classification of territory as an enemy entity; Discount Bank may follow suit, forcing Gaza banks to shut down
Hapoalim and Discount are the only two Israeli banks still working with the Palestinian Authority. Both decided to break with the Gaza Strip – where the risks to the banks' personnel, as well as the fear funds might find their way to terror groups, have proven not to be cost effective – not with the West Bank, but Discount's management has announced it is also reconsidering its ties with the West Bank.
The Israeli Shekel is the major currency used in Gaza and West Bank commerce; should both banks cut their ties with the Strip, it would create a cash-flow problem and cause significant harm to the Palestinian economy.
Following Hapoalim and Discount's decision, the Prime Minister's Office and the Bank of Israel have begun looking into alternative solutions to keeping up currency levels in Gaza.
Among the solutions under advisement are using the Postal Bank, using foreign banks which have local branches in the Palestinian Authority, converting the Shekel into Egyptian pound and possibly transferring funds through Egyptian banks.
The Bank of Israel ordered Hapoalim to wait at least two months before implementing its decision.
