New Delhi, July 24 -- RAMALLAH - Two of Israel's largest commercial banks are terminating the correspondent-banking relationships that have kept Palestinian cross-border commerce functioning for decades, and Palestinian monetary authorities warn the exits will push the territory's economy to a breaking point before the end of the year.

Discount Bank has told Palestinian lenders it will terminate correspondent services on September 1. Bank Hapoalim follows on October 1. Together, the withdrawals will sever Palestinian banks from the shekel clearing system and the international wire networks that handle payroll transfers, supplier payments, and import financing across the West Bank.

The Palestine Monetary Authority issued a public alarm d...