Afghans pull money from troubled Kabul Bank

Reporting from New Delhi and Kabul, Afghanistan —  Afghans on Thursday rushed to withdraw their savings from troubled Kabul Bank despite attempts by officials to reassure nervous depositors that their money was safe.

But the scramble, which followed U.S. news reports that Afghanistan’s largest private bank faced liquidity problems, had not yet risen to the level of a bank run.

At the bank’s main branch in Kabul, hundreds of frustrated customers crowded the counters, many shouting or elbowing for a number to get served, with a mass of people in front of the “$10,000 or more” withdrawal desk.

“I waited for six hours, but they didn’t let me withdraw the amount I wanted,” said Rafi, 24, who uses only one name. “People are in panic. They want to retrieve their money because they lost trust.”

The rush followed the resignation of two of the bank’s top executives this week amid allegations of mismanagement and questionable real estate loans, with the New York Times reporting Tuesday that the bank’s losses could exceed $300 million, more than its assets.

The bank’s woes come at a time when Washington is increasingly concerned about corruption in President Hamid Karzai’s inner circle. The bank is partly owned by the leader’s brother Mahmoud Karzai.

Afghan officials, however, said the resignations were the result of new rules that prevent shareholders from holding senior management posts at the bank. “We have assurances to people that their deposits are not lost, will not be lost,” Finance Minister Omar Zakhilwal said in a news conference Thursday.

“We are requesting people not to rush,” he said. “We know the money is there; they must not panic. We are sure, a hundred percent, that the bank is safe.”

Negative news about the bank could have a wide effect in the violence-racked nation given that about 250,000 bureaucrats and army and police officers are paid their salaries through the institution.

Harried bank staff said there was nothing to the reports.

“People think that Kabul Bank is going bankrupt,” said Mohammad Arif, a bank official. “I clearly say that this is not true. If we had problem, we would close our bank earlier.”

U.S. Defense Secretary Robert M. Gates said during a visit to Afghanistan on Thursday that he believed the Afghan Central Bank and Finance Ministry had acted prudently.

“As I understand it, the bank is open,” he told reporters in Kabul. “Last time I checked, it was providing money to the depositors that wanted it,”

The Afghanistan Banks Assn. also released a statement of support for the bank.

“I think our money is safe here because the government of Afghanistan has taken it over,” said Hamed, 27, a worker at a foreign aid agency, who gave only one name. “I don’t think the situation is so grave that people’s money will disappear.”

mark.magnier@latimes.com

Magnier reported from New Delhi and special correspondent Baktash from Kabul.