Hapoalim Bank has cut off in the last 24 hours all its connections with the Palestinian financial and banking system, in wake of the swearing-in of a Hamas-led government that has transformed the PA into a terror entity. The bank will cease to honor PA banks' checks and suspended the transfer of funds to the Palestinian banking system, Israel's leading newspaper Yedioth Ahronoth reported Tuesday.
Bank Hapoalim has up until now been the main, and recently almost the only, banking institution through which Israel and the PA conducted routine financial transactions. The bank's latest move in effect brings to an end any remaining banking ties between Israel and the PA.
Responding to Hapoalim's decision, a senior political source in Jerusalem said that the financial situation in the PA would "completely deteriorate to total chaos," but added that the bank "had no other choice."
The scope of Bank Hapoalim's transactions with the PA totals tens of millions of dollars on an average day. Following Hamas' ascendance to power, the bank has decided it will have no more contact with the Authority, this in accordance with international legislation that prohibits banks from doing business with organizations and institutions suspected of sponsoring terror activity.
Prior to finalizing its dramatic decision, the bank has asked the Israeli government to provide clarifications pertaining to the conditions
in which it is allowed to continue holding contacts with the Palestinians. Acting Prime Minister Ehud Olmert and Bank of Israel Governor Stanley Fischer asked of Hapoalim to suspend the decision, but following a series of legal consultations, the bank was informed it will have to stop doing business with the PA altogether.