Lender Disputes Kabul Bank's Losses
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KABUL, Afghanistan -- The Afghan Central Bank on Monday sharply disputed accounts by The New York Times and several other publications that Afghanistan's largest bank had hundreds of millions of dollars more in losses than previously publicized. In a statement and a news conference it said that Kabul Bank, the country's largest, "had a bright future."
"Kabul Bank is operating normally and without any problem throughout the country and offering its banking services," said the statement from the Central Bank, which described the bank as likely to become "one of the most successful in the country within three years."
Kabul Bank, the country's most politically connected as well as the largest, was crippled last fall when it became known that it had hundreds of millions of dollars in nonperforming loans. After a run on the bank by depositors that further eroded its solvency, and the replacement of the bank's management by executives from the Central Bank, there has been an intense effort to figure out how much money is missing and where it went.
The Central Bank's assertions of Kabul Bank's soundness came after reports from The Times and elsewhere that the bank's nonperforming loans and missing assets were between $800 million and $900 million, based on investigations by Afghan and American officials. The reports also described a number of the loans as difficult to recover because the money had been put into bad investments or had disappeared.
The Central Bank chairman, Abdul Qadir Fitrat, estimated at a news conference on Monday that Kabul Bank's total loans were $540 million. He said that the borrowers had signed agreements to repay 40 percent of the money, about $216 million, and that additional agreements were being negotiated. He said that $32 million to $40 million had already been repaid. He said the bank was still tracking down some of the loans but did not say how much they totaled.
There are multiple investigations trying to determine where the bank's money went and who was responsible for the bad lending decisions. The Central Bank, the Afghan attorney general's office and United States Treasury officials have been scrutinizing Kabul Bank's practices.
Mr. Fitrat appeared to be worried chiefly about the prospect of another run on the bank and was seeking to reassure depositors about its soundness. He underscored that Kabul Bank's finances were in the hands "of the sound, clean, expert and professional administration of the Central Bank."
First Published February 1, 2011 12:01 am
