Depositors Panic Over Bank Crisis in Afghanistan

[Jeffersons Ghost]

Depositors Panic Over Bank Crisis in Afghanistan
By DEXTER FILKINS


KABUL, Afghanistan — 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of the principal owners of the Afghan bank at the center of an accelerating financial crisis here said depositors had withdrawn $180 million in the past two days.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.

Khalilullah 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, Kabul Bank would almost certainly collapse, undermining confidence in the nascent financial system the Afghans have been trying to build with American help. “If this goes on, we won’t survive,” Mr. Frozi said in an interview. “If people lose trust in the banks, there will be a revolution in the financial system.”

Afghan leaders promised to guarantee deposits in an attempt to arrest the panic, which began earlier this week when the country’s top banking officials demanded the resignations of Mr. Frozi, the bank’s chief executive, and the bank’s chairman, Sherkhan Farnood.

Afghan and American officials say the two men presided over the bank in a reckless and freewheeling manner, doling out millions to allies of President Hamid Karzai and pouring money into risky investments that crashed.

http://www.nytimes.com/2010/09/03/world/asia/03kabul.html?_r=1&ref=global-home

[CanonRay]

1. Sure, lets give their banks another billion

that makes sense.

[Turbineguy]

2. "....undermining confidence...."

Here's a flash dude, it's the Bankers who provide the confidence, not the depositors.

[ThomWV]

3. How surprising, a corrupt banking system in an utterly corrupt nation