Bethlehem / PNN/

The European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC) are supporting the Palestinian economy in challenging times with an equity investment in Bank of Palestine.

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

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 war in Gaza started in October 2023. While the economic outlook for 2024 remains uncertain, a further contraction is to be expected. Gross domestic product (GDP) is set to shrink by anywhere between 6.5 and 9.6 per cent owing to employment losses and rising security tensions, which are continuing to affect mobility and business activity.

The EBRD investment in Bank of Palestine will have a significant impact, giving a much‑needed boost to the capital of a systemically important financial institution that accounts for more than 30 per cent of the Palestinian market.

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. Bank of Palestine is not only systemically important to the Palestinian banking sector, but a key pillar of the local economy.”

Hashim Shawa, Chairman of the Bank of Palestine Group, said: “Today is an important day in the history of Bank of Palestine. Two strategic international development institutions, the EBRD and the IFC, have joined forces to invest in the bank, helping to boost our capital and enabling us to support the economic recovery that will be required after the devastating war and economic crisis that our economy is enduring. 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. On behalf of my shareholders, board and staff, I would like to thank and salute the visionary leaders of the EBRD and the IFC.”

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 €142 million.