Andrew Higgins and Ernesto Londoño
Thursday, September 2, 2010
DUBAI – As depositors thronged branches of Afghanistan’s biggest bank, Mahmoud Karzai, the brother of the Afghan president and a major shareholder in beleaguered Kabul Bank called on Thursday for intervention by the United States to head off a financial meltdown.
“America should do something,” said Karzai in a telephone interview, suggesting that the U.S. Treasury Department guarantee the funds of Kabul Bank’s clients, who number about a million and have more than a billion dollars on deposits with the bank.
(ARTICLE CONTINUES BELOW)
Kabul Bank handles salary payments for soldiers, police and teachers. It has scores of branches across Afghanistan and holds the accounts of key Afghan government agencies. The collapse of the bank would likely spread panic throughout the country’s fledgling financial sector and wipe out nine years of effort by the United States to establish a sound Afghan banking system, seen as essential to the establishment of a functioning economy.
Action by the United States, said Mahmoud Karzai, would prevent a run on Kabul Bank and protect other banks, too. He said Kabul Bank is “stable and has money” but cannot withstand a stampede by panicked depositors.
This article was posted: Thursday, September 2, 2010 at 9:03 am