Afghans withdraw funds amid fears

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Nervous Afghans on Saturday continued pulling funds out of the nation's largest bank despite assurances from government leaders that their money was safe.

Crowds gathered at Kabul Bank branches around the capital to withdraw dollar and Afghan currency savings, with customers saying they had lost faith in the bank's solvency following a change in leadership and reports that tens of millions of dollars had been lent to political elites for risky real estate investments.

''Kabul Bank has lost the trust of the people. Even the chairman resigned so all the people are concerned,'' said Mohammad Nawaz, head of an Afghan aid group who had been trying for three hours to withdraw the $US15,000 ($NZ21,328) in his account.

The bank run that began earlier in the week undermines efforts by the central government to build an efficient political and financial system to drag Afghanistan out of its dire poverty.

Problems at the bank could have wide-ranging political repercussions since it handles the pay for Afghan public servants, soldiers and police in the unstable nation beset by a Taliban insurgency, widespread drug trafficking and the plundering of aid money.

Kabul Bank's woes also underscore entrenched problems with cronyism and corruption, with millions of dollars in deposits allegedly loaned to relatives and friends of the ruling elite to buy property in financially troubled Dubai.

The New York Times and The Wall Street Journal reported Wednesday that Kabul Bank's losses could exceed $US300 million _ more than the bank's assets. In addition, The Washington Post said Afghanistan's central bank had ordered Kabul Bank's newly resigned chairman to hand over $US160 million in Dubai real estate holdings.

On Thursday, President Hamid Karzai reassured anxious bank customers, saying every penny of their deposits would be guaranteed by the government.

''The Kabul Bank is safe,'' Karzai said in comments echoed by the country's central bank governor and independent banking association.

Despite the growing scepticism, Kabul Bank could still be the best option for Afghans with cash holdings, with its nationwide network of branches and automated teller machines and ability to provide financial services such as loans, bill paying, and money transfers.

Mohammad Habib Angar, a calligrapher, said he was taking out most of his Afghan and dollar savings, but wasn't ready to close his account.

''I will wait to see what will happen next. If the bank is able to create confidence, for sure I will put my money back in Kabul Bank because I do not want to close my account,'' Angar said.

- AP