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Afghan Bank 'Out of Danger'

   Ira Mellman 06 September 2010
   A branch of the Kabul Bank in Jalalabad, east of Kabul, 02 Sep 2010

Photo: AP

   A branch of the Kabul Bank in Jalalabad, east of Kabul, 02 Sep 2010

   Top finance officials in Afghanistan are trying to reassure depositors
   that  their  money is safe. This comes after reports that the nation's
   biggest bank was in trouble.
   Some 300 people began queuing up at 3 in the morning to withdraw money
   from  the central office of the Kabul Bank in the capital city. There,
   they  were  met by security officers carrying Kalashnikov rifles. When
   the  bank  opened,  they were permitted to enter when their number was
   called.
   This  man  said  "For now, I want to withdraw my money. If the bank is
   able  to create confidence, for sure I will put my money back in Kabul
   Bank. I don't want to close my account."
   Last  week,  Kabul  Bank's chairman and chief executive quit to comply
   with  new  rules  that  shareholders  in  a  bank could not hold those
   positions.  However,  the  Washington Post newspaper reported that the
   bank was in financial trouble due to millions of dollars in unrecorded
   loans  made  to  allies  of  President  Hamid  Karzai,  including  the
   president's  brother  that was used to buy villas in Dubai. Government
   officials denied that report. Nevertheless, Kabul Bank customers began
   to withdraw their money.
   Monday,  top  financial  officials  stressed  that the bank was out of
   danger.   Their   words   echoed   the  comments  made  last  week  by
   Afghanistan's Finance Minister Omar Zakhilwal.
   "My  message  to  all  the  depositors  is:  their  money is safe, the
   government  of  the Afghanistan bank is standing behind Kabul Bank, we
   know  the  money  is there, they must not panic," said Omar Zakhilwal.
   "If they need their money on a regular basis they can withdraw it. But
   to panic and say their money will be lost, I guarantee to them it will
   not be."
   Abdul Quadeer Fitrat, the director of Afghanistan's Central Bank said,
   if  needed,  the  central  bank  was  prepared to shore up Kabul Bank.
   However, he said Kabul Bank had not asked for any assistance.

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