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Two development funds have acquired equity stakes in the Bank of Palestine to support its crucial role in the Palestinian territories’ postwar economic recovery and reconstruction.
International Finance Corporation, a member of the World Bank Group, and the European Bank for Reconstruction and Development stepped in to shore up the bank's finances.
Part of the investment will go towards the Palestinian bank's planned expansion into the Gulf, North Africa and the Levant, it said in a statement on Tuesday.
Under the agreement, the Bank of Palestine will issue additional shares, with the IFC acquiring up to 5 per cent ownership and EBRD taking up a 3.92 per cent stake.
Apart from expanding the Bank of Palestine’s capital base, the investment will also strengthen its partnership with the two development finance institutions.
It will allow knowledge transfer and access to advisory and technical assistance programmes for Bank of Palestine’s impact-focused initiatives, aimed at promoting financial inclusion and fostering economic and social development “in a fragile market with political and economic challenges”, the statement said.
“We are fully committed to supporting the Palestinian economy and we aim through this investment to support BoP maintaining its role as the leading local institution to be well-positioned to capture any future growth from potential reconstruction efforts,” said Francis Malige, EBRD’s managing director for financial institutions.
Nearly half a million jobs in Palestine have been lost since the Gaza war began in October, with the gap between revenue and public expenditure widening significantly, according to the World Bank’s estimates in May.
An estimated 200,000 jobs have been lost in the Gaza Strip, while 144,000 people are no longer employed in the occupied West Bank as a result of the escalating violence and its repercussions on supply chains, production capacity and breadwinners’ inability to access their workplace, the multilateral lender said in a report.
The Israel-Gaza war has devastated Palestine’s economy, with severe damage to infrastructure and increasing poverty levels.
The Palestinian economy is projected to contract anywhere between 6.5 and 9.4 per cent during this year, the World Bank has said.
Hashim Shawa, chairman of Bank of Palestine group, said on Tuesday: “Today heralds an important testament in the mission of Bank of Palestine, two strategic international development institutions … joined forces to invest in the bank to enable us to be well-capitalised to assist in economic recovery in Palestine post the devastating war and economic crisis our country is undergoing."
Following the special issuance of shares, the bank's paid-in capital will reach $253 million, in line with its capital adequacy plans to kickstart growth and expansion.
The bank has obtained all required regulatory approvals for the investment and special issuance.
The bank, which is listed on the Palestine Stock Exchange, covers the entirety of the West Bank and Gaza.