x Abu Dhabi, UAEWednesday 17 January 2018

Used to crisis, bank customers shrug off firings

The Afghan government assures the public that the country's largest private lender, Kabul Bank, is not in danger of collapse.

Men wait to withdraw money from a Kabul Bank branch in Kabul after Afghanistan's biggest lender appeared to be facing a run yesterday.
Men wait to withdraw money from a Kabul Bank branch in Kabul after Afghanistan's biggest lender appeared to be facing a run yesterday.

KABUL // Customers waited for hours to withdraw their money from Afghanistan's largest private bank yesterday, amidst fears of a financial meltdown that the government insists is in no danger of happening. People started to gather at the main branch of Kabul Bank in the Shar-e-Naw area of the capital during the morning and were still there in the fierce heat of the afternoon, following the resignations of two senior executives from the company in the wake of corruption allegations.

Some were determined to withdraw all their savings after rumours started that the bank could collapse. However, the finance minister, Hazrat Omar Zakhilwal, sought to reassure them that they had nothing to worry about. "My message to all the depositors is that their money is safe," he told a press conference. "We know the money is there, they must not panic," he added. Allegations of corruption have long dogged Kabul Bank, but the controversy surrounding the company came to a head earlier this week when the chairman and chief executive were forced to quit their roles.

The official reasons given for the resignations were that new government rules stop shareholders from holding senior management positions in banks. However, that is believed to be little more than a smokescreen for more serious issues. According to TheWashington Post, pressure from the US and the Afghan president, Hamid Karzai, has led to the bank's former chairman, Sherkhan Farnood, being ordered to hand over about US$160 million (Dh588m) worth of luxury villas and other real estate bought in Dubai using company funds.

These properties were often purchased for people with close ties to top levels of the Afghan government. They included Mahmoud Karzai, a brother of the president and a shareholder in Kabul Bank, as well as Haseen Fahim, a brother of one of the vice presidents and another shareholder. Yesterday, some customers were determined to withdraw all their savings after rumours started that the company could soon collapse But in a nation used to crises of all shapes and sizes, the mood was one of quiet stoicism, rather than panic or anger.

Abbas Forotan had unsuccessfully waited for two-and-a-half hours at another branch of the bank before heading into Shar-e-Naw, the city's busiest neighbourhood, to try his luck there. He planned to take out the $6,313 his father had saved and then close that account. "When I was at the first branch, people were talking very strangely. Some said the main board members of the bank had all run away and some said the bank was not private anymore, it belonged to the government," he recalled.

The authorities and the company itself were quick to downplay any sense of crisis. Khalilullah Ferozi, the bank's former chief executive, admitted there had been "problems", with anxious customers withdrawing $80 million on Wednesday alone. However, he said, "There is not a run. We're here and we are prepared to pay out as much as the depositors want to withdraw from their accounts." Despite rumours to the contrary, Afghanistan's Central Bank denies it has taken control of Kabul Bank and insists the company is solvent. Meanwhile, the finance minister, Mr Zakhilwal, rejected fears that hundreds of thousands of government employees including teachers, police and soldiers could go unpaid because of the trouble.

Not everyone appeared entirely confident, though. Mahmoud Karzai, the president's brother who is also a shareholder, told TheWashington Post that intervention from the US might be necessary. "If the treasury department will guarantee that everyone will get their money, maybe that will work," he told the Post. Queues of worried customers were reported in some of Afghanistan's largest cities, including Mazar-e-Sharif in the north, Herat in the west and Kandahar in the south. In Kabul, one man, Amal Zaminy claimed to have been waiting for around six hours to withdraw roughly $1,000.

"People are afraid maybe this bank will be closed [down], so they are hurrying to get their cash," he said. @Email:csands@thenational.ae