Israeli banks sever ties with Palestinian Authority

Israeli banks announced last week that they had cut all their ties with Palestinian banks and no longer honor checks drawn on to those banks
 
Israel's leading newspaper Yedioth Ahronoth reported early last Tuesday that Bank Hapoalim Israel's largest bank had cut off 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 decision is reckoned to be the latest blow to the beleaguered Palestinian economy in the wake of the formation of a new Hamas government.
 
According to banking sources, Bank Hapoalim was the main banking institution through which Israel and the PA conducted routine financial transactions. The extent of the bank's ties with the Palestinian banks wasn't known, but is believed to be significant. The Palestinian government does its local business in the Israeli currency, converting millions of dollars each month to pay its 145,000 employees
Same sources acknowledged that the bank's latest move in effect brings to an end any remaining banking ties between Israel and the PA.
 
In a statement explaining the reason for stopping all business ties with the Palestinian Authority and its financial institutions the bank said that the law forbids any ties with organizations connected to terror.

It was further understood that if the bank did not stop its relations with the PA, it would have been open to legal action, both in Israel and the U.S. Bank Hapoalim said in a statement that it made its decision after reviewing local and international laws and "especially in light of the circumstances created."
 
Israel's second largest bank Bank Leumi also said that it has had no relationship whatsoever with the Palestinian Authority for weeks, in accordance with the law.