Troubled Kabul Bank runs on its own cash

September 7, 2010 at 12:00a.m.

Associated Press

KABUL, Afghanistan

Afghanistan’s largest bank is operating with its own money with no infusion of cash from the government despite a nearly weeklong run on the troubled institution that is being closely monitored by international banking experts, the nation’s top banking official said Monday.

The governor of the Afghan Central Bank, which is standing by to help if Kabul Bank collapses, assured customers that their deposits were safe and would be guaranteed by the government. At the same time, Abdul Qadir Fitrat said that, as a safeguard, the central bank had moved to ban the sale of properties that some of the bank’s shareholders own in the capital.

Uncertainty about the future of the nation’s largest bank, which is partly owned by Afghan President Hamid Karzai’s brother, has further destabilized the war-torn country and efforts to build an effective government.

At the request of Afghan officials, a team from the International Monetary Fund arrived in Kabul on Sunday to review recent developments in the economic, financial and banking systems, an IMF official said.

Fitrat did not disclose details of the bank’s financial condition, and it remained unclear how much money would be needed to shore it up if customers keep draining deposits.