Afghans Pull Money From Troubled Bank  09/04 09:57

   KABUL, Afghanistan (AP) -- Nervous Afghans pulled more deposits out of the 
nation's largest bank on Saturday, despite assurances from government leaders 
that their money was safe.

   Crowds gathered at Kabul Bank branches around the capital to withdraw dollar 
and Afghan currency savings, with customers saying they had lost faith in the 
bank's solvency following a change in leadership and reports that tens of 
millions of dollars had been lent to political elites for risky real estate 
investments.

   "Kabul Bank has lost the trust of the people. Even the chairman resigned so 
all the people are concerned," said Mohammad Nawaz, head of an Afghan aid group 
who had been trying for three hours to withdraw the $15,000 in his account.

   The bank run that began earlier in the week undermines efforts by the 
central government to build an efficient political and financial system to drag 
Afghanistan out of its dire poverty.

   Problems at the bank could also have wide-ranging political repercussions 
since it handles the pay for Afghan public servants, soldiers and police in the 
unstable nation beset by a Taliban insurgency, widespread drug trafficking and 
the plundering of aid money.

   While there was little apparent sign of panic, the deputy commander of the 
international coalition in Afghanistan said contingency plans were being drawn 
up to respond in the event of unrest.

   "We're prepared to deal with the unexpected," Lt. Gen. Sir Nick Parker said.

   Kabul Bank's woes further underscore entrenched problems with cronyism and 
corruption, with millions of dollars in deposits allegedly loaned to relatives 
and friends of the ruling elite to buy property in financially troubled Dubai.

   The New York Times and The Wall Street Journal reported Wednesday that Kabul 
Bank's losses could exceed $300 million --- more than the bank's assets. In 
addition, The Washington Post said Afghanistan's central bank had ordered Kabul 
Bank's newly resigned chairman to hand over $160 million in Dubai real estate 
holdings.

   On Thursday, President Hamid Karzai reassured anxious bank customers, saying 
every penny of their deposits would be guaranteed by the government.

   "The Kabul Bank is safe," Karzai said in comments echoed by the country's 
central bank governor and independent banking association.

   Calls to bank executives rang unanswered Saturday and it wasn't clear how 
much had been withdrawn. People hoping to take money out were given numbers but 
many had yet to be served when branches closed at noon as is customary.

   University student Ahmad Fahim held number 1,724, but tellers had made it 
only to number 200 late in the morning. He planned to return Sunday to try 
again to withdraw his family business' funds and close the account.

   "We've never had any problems with Kabul Bank, but after the news broke, we 
decided to take our money out," the 23-year-old said.

   Fahim said his father had no plans to open a new account and would 
distribute the cash among the homes of relatives for safekeeping. State-owned 
banks imposed burdensome limits on the amount of money that could be 
transferred, while other private banks were even less trustworthy than Kabul 
Bank, he said.

   Given such limited options, Kabul Bank could still be the best bet for 
Afghans with cash holdings, with its nationwide network of branches and 
automated teller machines and ability to provide financial services such as 
loans, bill paying and money transfers.

   Mohammad Habib Angar, a calligrapher, said he was taking out most of his 
Afghan and dollar savings, but wasn't ready to close his account.

   "I will wait to see what will happen next. If the bank is able to create 
confidence, for sure I will put my money back in Kabul Bank because I do not 
want to close my account," Angar said.


(KA)