The victims' group had filed a lawsuit in New York in December, accusing the Arab Bank of funding a "terrorist campaign of genocide" and demanding billions of dollars in compensation.
"They can run, but they can't hide," said Ron Motley, lead litigation counsel to more than 700 survivors and family members of those killed or maimed by bombings in Israel.
A similar lawsuit was filed by half a dozen other families in July. The lawsuits charged the bank with paying money to the families of Palestinian bombers, belonging to the resistance organisation Hamas.
A statement released by the Central Bank of Jordan on Tuesday said Arab Bank, one of the largest financial institutions in the Middle East, planned to shut down its New York branch.
The statement made no reference to lawsuits, saying only that "the climate of operating in the United States at present is not expedient with the bank's strategy and vision".
Last week, the Wall Street Journal reported that the bank was also being investigated by US regulators for alleged large-scale violation of money-laundering laws in connection with transactions by Palestinian charities and other clients.
Arab Bank has always insisted that the allegations made in the lawsuits were "entirely false".
"The bank has never and would never support terrorist organisations in any way," it said.
Arab Bank has more than 400 branches and offices in 25 countries.