Reports of potentially corrupt loans from Afghanistan’s largest bank to political insiders, undermining confidence in the banks strength, caused a bank run during the week.
Depositors withdrew $180 million on Wednesday and Thursday according to the Wall Street Journal, and even Saturday the run continued.
Afghans continued pulling money from their country’s largest bank Saturday, despite assurances from top officials that the lender, which has deep ties to the administration of President Hamid Karzai, was financially secure.
Hours after dozens of branches of Kabul Bank closed following the first business day since the Islamic weekend, there was no word from Afghanistan’s central bank or the lender’s management on how much money had been withdrawn Saturday.
It isn’t clear if Kabul Bank’s assets—mostly loans and property—are easily recoverable. If the pace of withdrawals hasn’t slowed, the bank could run out of cash in the next few days, despite its relatively large cash reserves.
U.S. officials fear that even the hint of failure at Kabul Bank, the largest of Afghanistan’s 10 private banks, could prove dangerously destabilizing. More than a quarter of a million soldiers, police and teachers are paid their salaries through the bank, and the Afghan government keeps many of its accounts there.