Kabul Bank Set For Sell-Off

Afghanistan’s government has agreed to wind down and sell off the embattled Kabul Bank to meet a condition imposed by the International Monetary Fund for resuming financial support to the country, an Afghan official said, the Financial Times reported. The IMF, backed by western donors, had demanded the government place the country’s biggest lender into receivership as part of a plan to shore up the financial system following the bank’s near-collapse last year. Kabul Bank, which made huge loans to a coterie of well-connected businessmen, suffered a run in September after the central bank replaced senior managers amid corruption allegations. Afghanistan’s government had initially resisted international pressure to liquidate the bank, fearing such a move would further damage confidence in the banking system. But a finance ministry official said on Sunday that the government has now agreed to press ahead with the IMF’s demand that Kabul Bank be sold. However, officials at Afghanistan’s central bank cautioned that no final decision on its fate had yet been made, raising the possibility of more wrangling over the lender’s fate. The central bank this year rejected the IMF’s demand that Kabul Bank be sold, saying it wanted to nurse the lender back to profitability before finding a buyer. The dispute emerged as a main sticking point in discussions between the IMF and Afghan government on a new support package for the country. Read more. (Subscription required.)