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(photo credit: Ariel Jerozolimski)
Israel's Discount Bank on Wednesday cut ties with banks in Gaza, in line with the Israeli government designation of Gaza as a "hostile territory," the bank said in a statement.
Palestinians do not have their own currency, using the Israeli shekel for transactions.
The Discount Bank decision followed a similar one by the larger Bank Hapoalim to sever links with banks in Gaza. They were the only two Israeli commercial banks dealing with financial institutions in Gaza.
Israel's Cabinet declared Gaza a "hostile territory" last month, following the June takeover of Gaza by Hamas, expelling forces loyal to moderate Palestinian Authority President Mahmoud Abbas. Hamas does not recognize Israel's existence and has send dozens of suicide bombers into the Jewish state, killing hundreds.
The hostile territory designation was meant to allow Israel to cut off or restrict vital services to Gaza, like supplies of fuel, water and electricity, but no such moves have been made.
After the Bank Hapoalim decision, Gaza economists said it would hinder commerce in the seaside territory and might lead to a run on Gaza banks. That has not happened.
In its statement, Discount Bank also said it would examine "halting relations with all the banks in the Palestinian Authority." It did not elaborate.
Gaza gets its currency through the Palestinian central bank, which has ties with the Bank of Israel through its headquarters in Ramallah. Though Hamas is ruling Gaza after its takeover, Abbas has appointed a new government that claims authority over Gaza as well as the West Bank.