GAZA, May 6 (Nidal al-Mughrabi/Reuters) - A major bank in the Gaza Strip closed down two branches on Thursday, sparking a stampede by depositors and a crush in which several clients fainted.

Panic hit after word spread that the Arab Bank had shut two of its three branches to cut losses in the blockaded enclave.

The street outside the lone remaining branch in Gaza city quickly filled with people from all over the Strip demanding their money. The three bank clerks inside were rapidly overwhelmed by worried customers.

Ambulances with sirens wailing pushed their way through backed-up traffic to tend to people who fainted in the crush.

The Jordan-based Arab Bank Group announced on Wednesday that in light of worsening conditions under which the Bank is called upon to operate in Gaza and after having recently reduced the number of its staff there, it has also decided to close two of its three branches.

We regret these decisions, but it is becoming difficult in the present environment to maintain our high standards of operation, said the bank's Palestine manager Mazen Abu Hamdan.

He apologized for the adverse consequences that this action might have on the local population and business community of Gaza and said the bank would compensate those laid off.


MAXIMUM FINE

The Palestine Monetary Authority (PMA) fined the bank a maximum 300,000 Jordanian dinars ($424,000) for closing its Gaza branches without approval.

The PMA regulates banks in the West Bank and Gaza Strip, where the Islamist group Hamas seized control in 2007 from forces loyal to the Fatah movement of Palestinian President Mahmoud Abbas, who controls the Palestinian Authority (PA).

Hamas, which opposes a peace treaty that would recognize Israel, does not recognize the Western-backed PA government, and the territory it controls is blockaded by Israel and Egypt. In March, Hamas security forces took $400,000 from a Bank of Palestine branch in the Gaza Strip, challenging a PMA order to freeze assets in compliance with money laundering regulations.

Palestinian bankers said banks in Gaza fear that Hamas plans to impose taxes on them. Banks cannot operate in an environment such as the one that exists in Gaza. It has become a risky business there, a senior Palestinian banker told Reuters.

International anti-laundering rules ban banks from doing business with Hamas, which is listed in the West as a terrorist organization.

One PA employee in Gaza, Jehan Al-Sersawi, said she had been trying since Wednesday to withdraw her salary and savings of $2,500 but could get no money out.

They refused to give me my $2,500 deposit and also said they cannot give me the salary today. They have only three employees to deal with all those people, she said.

The Arab Bank must understand that this is not a stable for horses they can shut down without notice. They should deal with us as human beings who have been their clients for years.

Gaza's 1.5 million Palestinians rely heavily on foreign aid. Their modest economy was wrecked in last year's three-week war with Israel. Gaza has nothing to export and over 50 percent of the workforce is unemployed. ($1 = 0.709 Jordanian dinar)