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Karzai moves to assure Afghan depositors

The Kabul Bank intervention sparks a rush of withdrawals.

In volatile Helmand province, where the news of the crisis sparked a major run on the small branch, a uniformed guard had to hold off angry depositors at gunpoint.

Farhod Ahmad, a soldier with the Afghan national Army 5th battalion, who has been stationed in Helmand for six months, said he would withdraw whatever he could once he managed to get inside.

“I am going to put it in my jacket bank,” he laughed, patting his pocket.”

Even in the more cosmopolitan Kabul, the crisis could do serious and long-term damage to the Afghan banking industry. Many of those waiting to withdraw their money on Thursday said they would not put it back in any other bank.

“I don’t trust any Afghan bank,” said a young woman in black, wearing braces on her teeth. She gave her name as Mutahar. “I will take all of my money out, and I won’t go near any bank associated with this government.”

Others said they would put their cash in one of the foreign banks operating in Afghanistan, such as Alfalah, owned by the Abu Dhabi Group.

But the government assurances were more than enough for some.

“Nobody is really worried,” said one burly, mustached man who said his name was Mahmoud. “The money in Kabul Bank is guaranteed by the central bank. It was just a switch of directors.” He then added, confidently if erroneously,” My money is insured by the central government.”

The central bank does not, in fact, insure individual deposits. It is unlikely, however, that Da Afghanistan Bank would let Kabul Bank go under, since it uses the institution to pay its teachers, police, and soldiers.

Karzai emphasized this in his press conference Thursday evening: “The Ministry of Finance today, I believe, released … between $100 [million] and $150 million … from the bank to handle the payments and the salaries of our government employees,” he said.

Denying salaries to men with guns is not a winning policy in any country.

“Depositors are not going stand around drinking lattes and waiting for their money,” laughed Najib, a young scholar who has recently returned from a year in the United States. “These guys have Kalashnikovs.”

http://www.globalpost.com/dispatch/afghanistan/100902/afghans-rush-withdraw-their-savings