Pressure Rises on Shaken Kabul Bank in Afghanistan – NYTimes.com

One of the principal owners of the Afghan bank at the center of an accelerating financial crisis here said depositors had withdrawn $180 million in the past two days. He predicted a “revolution” in the country’s financial system unless the Afghan government and the United States moved quickly to help stabilize the bank.

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Khalil Frozi, one of the two largest shareholders of Kabul Bank, said reports indicating that the institution had lost as much as $300 million were overstated. But he predicted that if Afghan depositors continued to withdraw their money at the current rate, then Kabul Bank would almost certainly collapse — undermining confidence in the nascent financial system Afghanistan has been trying to build with American help.

“If people lose their trust in the banks, then we will have revolution in our financial system,” Mr. Frozi said in an interview. “We need the Afghan government and the U.S. government to support us. That is essential.”

The news came as Afghan leaders took the first steps toward arresting the panic, which began earlier this week when the country’s top banking officials demanded the resignations of Mr. Frozi, the bank’s chief financial officer, and of the bank’s chairman, Sherkhan Farnood.

Afghan and American officials say the two men presided over the bank in a reckless and free-wheeling manner, doling out millions to allies of President Hamid Karzai and pouring money into risky investments that went bust. The bank’s nosedive — and the corruption associated with it — are posing a direct challenge to the country’s fledgling financial system, which was built under American guidance following the collapse of the Taliban government in 2001.

via Pressure Rises on Shaken Kabul Bank in Afghanistan – NYTimes.com.

via Pressure Rises on Shaken Kabul Bank in Afghanistan – NYTimes.com.

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