Israeli banks plan to cut correspondent services to Palestinian banks

Israel Discount Bank and Bank Hapoalim have written to Palestinian counterpart banks stating they will end their correspondent banking relationships by Sept. 1, 2026. The two banks say the move is needed to avoid exposure to terror‑financing and money‑laundering lawsuits, and they are pressing the Israeli finance ministry to provide indemnities.

If the services are halted, transfers that underpin the West Bank’s import‑export flow – valued at over NIS 21 billion in 2025 – could be blocked, risking a commercial blockade of the Palestinian economy. Palestinian officials, including the Palestine Monetary Authority, have called for international intervention and plan a meeting in Ramallah with UN, World Bank and IMF representatives to raise alarm over a potential collapse.

The Israeli finance ministry acknowledged the banks’ intent and said it is discussing ways to maintain a “safe and responsible” mechanism for the transactions, while Prime Minister Benjamin Netanyahu is expected to become involved.