Monday, September 6, 2010

Bank Run "Kabul Edition"......

Should be no surprise that the name KARZAI is popping up again..... Some folks have learned quite a lot from us ( US & Europe ) when it comes to the play the "Bailout / Moral Hazard Game"...If this wouldn´t be so depressing one could almost "congratulate" the "fraudsters" for recognizing that this bank is definitely TBTF.... :-(

Das hier erneut der Name KARZAI auftaucht dürfte wohl nur noch die Bundesregierung überraschen..... ;-) Bei dem seit Jahren anhaltendem "Anschauungsunterricht" ( besondern in den USA & Europe ) wenig verwunderlich das praktisch weltweit das Thema "Bailout / Moral Hazard" ständig kopiert und wie in diesem Fall besonders "brilliant" gespielt wird...:-( Selten das eine an sich so kleine Bank ohne Zweifel der Kategorie "Too Big To Fail" zuzuordnen ist....



Afghans Move to Bail Out Kabul Bank WSJ
KABUL—Afghanistan's government inched closer to bailing out the country's largest bank, setting aside hundreds of millions of dollars that could be used to keep Kabul Bank solvent, officials said.

The move Sunday came as depositors continued to pull their money from the lender, mobbing branches in Kabul and other parts of the country. In the capital, police and soldiers were ordered to guard Kabul Bank branches and razor wire was strung outside the main branch to keep crowds in check.

Averting the failure of Afghanistan's largest bank, an institution with ties to President Hamid Karzai's administration, has become a priority for U.S. and Afghan officials concerned by the political and economic crisis that could result.

There were conflicting accounts of how much money the Afghan government was preparing to divert to Kabul Bank from its roughly $4.8 billion in foreign-exchange reserves. A central-bank official said the bailout would likely be in the $200 million range; a finance ministry official put the figure "closer to double that."

The central-bank official said several options were being discussed to recover the funds that are likely to be pumped into Kabul Bank. One option is forcing major shareholders who bought their stakes with loans from the bank to either repay what they borrowed or hand over their shares.

Another option is confiscating properties or businesses bought or built by bank insiders with loans from the lender.

Major shareholders include brothers of President Karzai and First Vice President Muhammad Fahim, U.S. and Afghan officials say. The "politics are delicate," the central-bank official said.

Finance Minister Omar Zakhilwal said the Afghan government Saturday transferred $100 million dollars to Kabul Bank to cover salaries for about 250,000 soldiers, police and teachers, who are paid through accounts at the lender.

Kabul Bank's woes became public late Tuesday, when word leaked that Afghanistan's central bank had forced out the lender's chairman and chief executive—its two biggest shareholders—amid allegations that they made hundreds of millions of dollars in sometimes-clandestine loans to themselves and Afghan government insiders.

U.S. and Afghan officials also say the bank used one of Afghanistan's traditional hawala money-transfer outfits to move hundreds of millions of dollars out of the country in an apparent attempt to avoid detection, though it isn't clear what the money was then used for.

On Wednesday and Thursday, depositors withdrew almost $180 million, more than a third of the $500 million the bank had on hand before the crisis.

It isn't clear if Kabul Bank's assets—mostly loans and property—are easily recoverable.
When bankers are more dangerous than warlords Felix Salmon
Speaking Wednesday from his villa in Dubai, which was paid for by Kabul Bank, Mahmoud Karzai, the president’s brother, said cash withdrawals from the bank were a “little bit more than usual” but did not threaten to cause a meltdown. A full-scale run on Kabul Bank, he added, “would be a major disaster.”

Yes, the president’s brother is a part owner of the bank, and he’s living in Dubai, in a villa paid for by the bank — which, incidentally, handles the payroll for Afghan soldiers and schoolteachers — and really, what could possibly go wrong?
Bill Black: “Control Fraud” Crushes Kabul NC
Kabul Bank has been revealed to be a “control fraud.” Control frauds occur when those that control a seemingly legitimate entity use it as a “weapon” to defraud. Control frauds cause greater financial losses than all other forms of property crime – combined. Control frauds can also cause immense damage to a nation because they are run by financial elites that curry favor from political elites. The result is that they are often able to loot “their” banks for years with impunity

The CIA tells us that Afghanistan raised roughly $1 billion in revenues last year and expended $3.3 billion. The shortfall, of course, was funded by us (the West, principally the U.S.). Indeed, that understates the case because Afghanistan raised the $1 billion in revenues primarily through customs duties and the U.S. and other Western nations indirectly or directly funded most of those customs duties.

We know certain facts. Afghanistan has no deposit insurance system. Its government has no financial responsibility for bailing out Kabul Bank’s depositors. Nevertheless, Afghanistan’s government has announced it will bail out the depositors. The funds to bail out the depositors will come – indirectly, but surely – largely from the United States Treasury
Karzai Family Political Ties Shielded Bank in Afghanistan NYT

In early 2009, as President Hamid Karzai scanned the landscape for potential partners to run in his re-election bid, he was approached from an unusual corner: a bank.

After the deal, Kabul Bank poured millions into Mr. Karzai’s re-election campaign, Afghan officials said. Mahmoud Karzai and Haseen Fahim, drawing on Kabul Bank’s resources, were able to enrich their families aided by tens of millions of dollars in loans.

“The brothers orchestrated the political deal to serve their business interests,” said a prominent Afghan businessman in Kabul who, like virtually everyone interviewed for this article, spoke only on condition of anonymity. “Fahim became vice president, and the bank financed Karzai’s re-election.

“In Kabul, politics is all about money,” he said. “It’s the same thing.”
FT Alphaville
Afghanistan’s central bank has stepped in to take control of the troubled Kabulbank, its governor said on Tuesday, after suspected irregularities raised concerns over the country’s top private financial institution.

Central Bank Governor Abdul Qadir Fitrat told Reuters investigations had also been started into the dealings of the bank’s top two directors and shareholders, who were told to resign, and a brother of Afghanistan’s First Vice President, Mohammad Qasim Fahim.

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