London-headquartered European Bank for Reconstruction & Development (EBRD) and the World Bank’s International Finance Corporation (IFC) are making equity investments in Bank of Palestine, which accounts for over 30% of the Palestinian banking sector.

Under the new investment agreement, Bank of Palestine will issue additional shares, with the EBRD acquiring a stake of up to 3.92% and the IFC taking a stake of up to 5% through primary issuance.

The respective investments aim to support the Palestinian economy in challenging times, EBRD said in a statement on 27 August.

Photo credit: EBRD

It added: “The EBRD’s investment will help Bank of Palestine to proceed with its plan to expand in the region and support the bank’s financial inclusion work in the Palestinian economy.

“Bank of Palestine is the leading banking group in the West Bank and Gaza and is deeply committed to financial inclusion, with a strong focus on small and medium-sized enterprises (SMEs) and the empowerment of women and young people.”

The Palestinian economy has faced numerous challenges since the latest war in Gaza started in October 2023.

While the economic outlook for 2024 remains uncertain, a further contraction is expected.

According to EBRD, the country’s GDP is set to shrink by anywhere between 6.5% and 9.6% owing to employment losses and rising security tensions, which are continuing to affect mobility and business activity.

Francis Malige, the EBRD’s managing director for financial institutions, said: “We are fully committed to supporting the Palestinian economy. Our aim with this investment is to help Bank of Palestine maintain its position as the leading local institution, leaving it well placed to capture any future growth stemming from reconstruction efforts.”

The two banks’ equity investment investments help “boost our capital … enabling us to support the economic recovery that will be required after the devastating war and economic crisis that our economy is enduring,” said Hashim Shawa, chairman of the Bank of Palestine Group.

“This investment is important for our future growth, sending a message of hope and partnership, confidence in the future role that the bank intends to play in the local economy and faith in the bank’s planned regional expansion.”

Since the start of its activities in the West Bank and Gaza in 2017, which are conducted through a trust fund, the EBRD has approved 27 transactions worth a total of €142m.

Main photo: Pixabay, for illustrative purposes only