Israeli banks Hapoalim and Discount have informed Palestinian banks of their intention to halt vital correspondent banking services within weeks, news agency AFP reported.
Five Palestinian banks that rely on Bank Hapoalim for correspondent banking services will lose access to these services on 13 August, while banks that conduct transactions through Discount Bank face a similar fate on 1 September, the report quoted Palestinian banking officials as saying.
The Israeli finance ministry said that the decision was made due to "increasing public risks and concerns about private lawsuits that could target Israeli banking institutions".
In a statement, the ministry said it is in discussion with the two banks to ensure the continuation of correspondent banking services "in a safe and responsible manner," while protecting Israel's security and economic interests.
Palestinian banks are linked to Bank Hapoalim and Bank Discount through correspondent banking relationships, an operational link connecting the Palestinian banking system to the Israeli financial system.
