Israel’s next government will need to find a solution that will allow Israeli banks to continue working with their Palestinian counterparts after a deal was reached to continue services until the end of 2026, a senior Bank of Israel official says.
Two Israeli banks had been set to halt working with Palestinian banks — Israel Discount Bank on September 1 and Bank Hapoalim in a month — due to concerns over the risks of associating with possible terrorism financing and money laundering. But after negotiations with the Finance Ministry, the banks have agreed to delay severing ties until the end of 2026, Bank of Israel Deputy Governor Andrew Abir says.
“Then, it will be an issue for the new government to decide who should be carrying on that burden of the business of correspondent banking with Palestinian banks,” he tells Reuters. “The deadline has been pushed off.”
Israel heads to elections on October 27.
Discount and Hapoalim have been providing correspondent services with Palestinian banks through a series of indemnity waivers signed by Israel’s finance minister.
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Tuesday, September 1, 2026
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