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Palestinian bank Photo: AFP
Palestinian bank Photo: AFP
 
 

Exclusive: Arab Bank shuts down in Gaza

Only bank functioning according to international standards closes three Gaza branches, bringing an end to money transfers from aid groups

Golan Hazani, Calcalist
Published: 05.10.10, 15:41 / Israel Business

The largest bank in the Arab world, the Arab Bank, will shut down its three Gaza branches, the Calcalist learned Monday. Their closing will mark the last of the banks working according to international banking standards in Gaza.

 

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More importantly, the Arab Bank was the main channel for funds transferred to Gaza from aid organizations as well as any financial interaction with the outside world.

 

Two of the three branches were closed last week, and the main branch is intended to shut down soon. In the West Bank, however, the Arab Bank plans to continue to hold branches in every major city.

 

Local Palestinian banks are the only ones to remain in Gaza, among them the bank of Palestine and the Islamic Bank, which do not function according to international standards or receive funds from international sources, who fear their money will fall into the hands of Hamas. This danger exists because these banks are unsupervised.

 

The reason the Arab Bank has decided to shut its doors is a fear of future lawsuits by anti-terror organizations. Calcalist has learned that the Hamas authorities have recently demanded of the bank all tax money collected, which is generally transferred to the Palestinian Authority in Ramallah. The move would certainly expose the bank to lawsuits.

 

"Conditions have emerged which make running a proper bank impossible," a source affiliated with the Arab Bank told Calcalist. "In recent months the bank has limited its operations in Gaza, but now there is no choice. The bank must halt all operations in the Strip in order to comply with international banking laws," he said.

 

Last week a group of gunmen entered a local Palestinian bank and demanded $400,000 of its collected tax money.

 

The bank's desertion will be a rough blow for Gazans, who will no longer be able to transfer money abroad and will certainly suffer difficulties in receiving paychecks or aid money from Ramallah.

 

"We are committed to the most severe banking standards and maintaining a high level of operations in accordance with international rules of propriety. Unfortunately, the situation in Gaza does not allow us to function at the level to which we are committed, and therefore the bank's operations will cease until proper working conditions are made available," the Arab Bank stated to the Calcalist.

 

The Arab Bank was founded in 1930, in the time of the British Mandate. Its founders and owners are Palestinians who reside in east Jerusalem. It is currently one of the largest Arab financial organizations, and holds 500 branches in 30 countries.

 

The bank's chairman, Abdel Hamid Shoman, inherited the position from his father, Abdul Majeed Shoman, who was a fervid supporter of former Palestinian President Yasser Arafat and the Palestine Liberation Organization, and donated much to its budget.

 

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