Karzai Urges Calm Over Kabul Bank Woes

Nervous Afghanis are rushing to withdraw money from Afghanistan’s largest bank following the resignation of two top executives and allegations of mismanagement and corruption.

The New York Times reported this week Kabul Bank’s losses could exceed $300 million, an amount the paper says is “far exceeding its capital.”

The central bank of Afghanistan and President Hamid Karzai, whose brother holds a 7 percent stake in Kabul Bank, have stepped in to try calm investors’ fears, Global Post’s Jean MacKenzie reports:

Karzai late on Thursday did not deny that Kabul Bank had its difficulties, but insisted that the government was able to control the situation.

“We deemed it necessary to take action immediately [in the case of Kabul Bank],” he said. “But Kabul Bank is safe. People don’t have to panic … The government of Afghanistan is fully behind that bank.”

But his remarks are unlikely to quell the growing fears among his countrymen, hundreds of whom were lined up in the hot sun outside the main branch of Kabul Bank on Thursday, patiently waiting their turn. Inside, the crush was almost suffocating – there was barely room to push between the crowds desperately trying, first to get a number, then to be served.

There was little panic in the air, more a grim determination to get their money as soon as possible and get away from what many see as a tainted organization.

“We do not trust this bank any more,” said a young man who identified himself as a researcher at a local think tank. “The government is corrupt, and that corruption is spreading.”

Read more of MacKenzie’s report over at Global Post.