Tensions rise as Afghanistan's largest bank faces collapse

vivatifosi

Interesting story running on BBC News channel.

Queues are forming outside the main branch of Afghanistan's largest bank - Kabul Bank - because of fears that it may collapse. Barbed wire has been put up around the bank and armoured vehicles are outside. The crowds have been told they may only withdraw a maximum of £10k.

Situation very tense according to BBC reporter Mark Dummett. Crowds waiting many hours to withdraw their money. They no longer trust the government when they say the bank is safe. The run on the bank started when news broke on the internet that the banki was not safe.

Per WSJ:

Averting the failure of Kabul Bank has become a top priority for U.S. and Afghan officials, who fear the possible political and economic crisis that could result. Even with the bank still solvent, U.S. officials are concerned that its woes, brought on by allegations of corruption and insider dealing, are going to further setback faltering Western efforts to restore confidence in President Karzai's administration, a pillar of the allied strategy for beating back the Taliban....

... Finance Minister Omar Zakhilwal said the Afghan government Saturday transferred $100 million dollars to the bank to cover salaries for about 250,000 soldiers, police and teachers, who are paid through accounts at the lender....

....Kabul Bank's woes first became public late Tuesday, when word leaked out that Afghanistan's central bank had forced out the lender's chairman and chief executive—its two biggest shareholders—amid allegations they made hundreds of millions of dollars in sometimes clandestine loans to themselves and Afghan government insiders.
Kabul Bank's former chairman, Sherkhan Farnood, used bank money to buy more than $150 million in properties in Dubai in his and his wife's name. Large loans were given to powerful Afghans, including brothers of President Karzai and First Vice President Muhammad Fahim. U.S. officials say the bank used one of Afghanistan's traditional hawala money transfer outfits to move hundreds of millions of dollars out of the country in an apparent attempt to avoid detection, though it is not clear what the money was then used for....

...On Wednesday and Thursday, panicked depositors withdrew almost $180 million, more than a third of the $500 million the bank had on hand before the onset of the crisis. The bank was closed on Friday, the Muslim day of rest, and reopened Saturday...


http://online.wsj.com/article/SB10001424052748704282504575471660439089080.html?mod=googlenews_wsj

mbga9pgf

Oh dear.

I have a thou afghani upstairs. The bills are marked "Da Afghani Bank". Very Ali G.

Look good next to my chromed AK47 oak mounted next to a picture frame with my silk escape and evasion map, a 2 inch thick wad of saddam marked Iraqi dinar and a picture of me enjoying saddams swimming pool. Boy, I miss 2005.

Generali

In other international news (link)

COTONOU, Benin — More than a hundred thousand people in the tiny West African nation of Benin have lost their savings in a Ponzi scheme run by a now-defunct company that appeared to be publicly endorsed by the country's president.


The government said in a statement last month that more than 130,000 people gave their savings to Investment Consultancy and Computering Services. Together they lost more than $130 million, the statement said.


The corporation was registered as a nonprofit computer service company and was operating illegally as a banking institution. ICC was forced to close July 1, and more than a dozen of its employees were jailed.


But the reverberations have echoed to the top of Benin's power pyramid and now threaten President Boni Yayi, who appeared on television with ICC managers.
Television news shows showed Yayi and other top government officials posing alongside the managers of the investment firm. The images were reproduced on T-shirts. While investors interpreted Yayi's presence as an endorsement, the president did not officially speak in favor of ICC during the appearances.


In this country of 8.7 million people, the average yearly income hovers at $750. Many lost months to years of savings in the scam.

ILW

I have put all my savings into the Afghan bank becoause they were offering 7.5% interest. Am I protected by the Bank of England?

damanpunk

This is it, the start of the next leg down :beer::money:

tomterm8

ILW wrote: »

I have put all my savings into the Afghan bank becoause they were offering 7.5% interest. Am I protected by the Bank of England?

No.

.............................................

bendix

ILW wrote: »

I have put all my savings into the Afghan bank becoause they were offering 7.5% interest. Am I protected by the Bank of England?

:rotfl::rotfl::rotfl::rotfl::rotfl::rotfl::rotfl:

made me laugh!

Lance

ILW wrote: »

I have put all my savings into the Afghan bank becoause they were offering 7.5% interest. Am I protected by the Bank of England?

You can get 11% now.......... it's very tempting.