More bad news today from Kabul Bank, Afghanistan’s largest lender. The bank, which received a bail-out last year when suspicions of widespread fraud led to a run on deposits, is once again making headlines for all the wrong reasons.
Afghan authorities launched an investigation into Kabul Bank earlier this month, with news breaking today that losses at the bank could reach US$900m. If true, this would represent more than nine times the bank’s equity. Meanwhile, Mahmoud Karzai, a major Kabul Bank shareholder and brother of Afghanistan’s president, is quoted in the Guardian suggesting that losses are instead on the order of US$600m. During the run on deposits in September last year, it was thought that the bank faced losses of around US$300m.
The Afghan Central Bank disputes the new figures, and cites a much lower level of outstanding loans, US$540m, than suggested elsewhere (up to US$1bn). Whatever the case, once the true financial state of Kabul Bank becomes clear, it is likely that it will not make for pleasant reading.