Afghanistan's government said Monday it has frozen assets held by some of Kabul Bank's owners as the crisis-hit institution faced huge withdrawals by depositors nation-wide. Hundreds of customers have been queuing at branches across the country for several days, emptying their accounts amid fears that Afghanistan's largest private bank was collapsing largely due to illegal withdrawals by its owners.
The war-torn country's central bank governor, Abdul Qadir Fitrat however, said the Kabul Bank was solvent and had the backing of President Hamid Karzai's US-funded administration. "Today the cabinet of Afghanistan announced its support to the Kabul Bank. It was agreed that the (Islamic) Republic of Afghanistan and the central bank stand behind the Kabul Bank with all their resources," Fitrat told reporters.
Fitrat said the assets, mostly in the form of real estate, of "some of Kabul Bank's shareholders" had been frozen. He refused to give details. "We have frozen some properties or put a ban on properties of some shareholders," he said. When pressed for names, he said: "They are only those shareholders who owe Kabul Bank loans."
"We have asked Kabul municipality not to allow the sale of these properties," Fitrat added. Fitrat said he had instructions from Karzai's administration to provide support to the troubled Kabul Bank including funds to help it remain solvent. But he dismissed suggestions that millions of dollars had already been pumped in the crisis-hit Kabul Bank. "The cabinet and the President announced their full and unconditional support for the governor of the central bank and the finance minister with regards to the Kabul Bank," Fitrat said. Asked if he had provided any fund to the bank, the governor said: "The Kabul Bank is still using its own money and resources."
Fitrat's spokesman Emal Ashore had earlier dismissed Western media reports that the government had approved a 200-million-dollar loan to Kabul Bank but said it was "ready to provide loans". "I dismiss that the central bank has requested a 200-million-dollar loan (from the government) to the Kabul Bank. But we are ready as per the laws to provide loans to the Kabul Bank, if it requests," Ashore told AFP.
"As the biggest loan-providing institution we, the central bank, are ready to provide loans to the Kabul Bank," he said, refusing to give any further details. Fitrat said "the central bank will provide any support Kabul Bank requests". Despite the assurances, customers continued to form long queues at Kabul Bank branches in all major cities, with depositors demanding their savings.
"I don't trust this bank anymore," said one client coming out with 100,000 dollars from a branch in the northern city of Mazar-i-Sharif. "I took all my money out," he said, smiling. In the western city of Herat hundreds of men and women had been waiting in long lines behind Kabul Bank's biggest branch since early morning, hoping to withdraw their money.
Security was tight with extra guards manning the entrances of the each branch. Kabul Bank has been the subject of reports alleging large-scale corruption by executives. Assurances by President Karzai, his ministers and the central bank governor insisting the bank remains solvent have not persuaded worried savers leave their money in the bank.