Gaza Banks Say May Shut Down by Jan. Over Financial Clampdown

Palestinian banks: Bank Hapoalim's decision to sever ties will exacerbate territory's financial problems.

The Palestinian bank regulator said on Wednesday some Palestinian banks could be forced to shut their Gaza branches by year-end due to Israel's financial clampdown on the Hamas-controlled territory.

The governor of the Palestine Monetary Authority, George Abed, said Gaza's supply of shekels, the Israeli currency, could begin to run out starting next month and that individual Gazans could have trouble receiving funds from family members abroad.

In an interview with Reuters, Abed said the 42 bank branches operating in the Gaza Strip were struggling due to the territory's economic deterioration, steep declines in imports and exports, and limitations on the supply of shekels used for day-to-day transactions.

Abed said the decision of Israel's largest commercial bank, Bank Hapoalim to sever ties with financial institutions in the Gaza Strip would exacerbate these problems unless alternatives are found quickly.

"There is a risk that several branches could close down before the end of the year if this continues," the former International Monetary Fund official said, adding additional branches could close later if the problems continue.