Afghanistan says it will back Kabul Bank

KABUL, Afghanistan, Sept. 3 (UPI) -- Afghan President Hamid Karzai said the government would guarantee deposits at stumbling Kabul Bank, which was rocked by a sudden government takeover.

Some fear an apparent depositor run on Kabul Bank could spread through Afghanistan's banking system.

"Even if the whole financial system in Afghanistan collapses, we have enough money to support it," Karzai said.

Karzai blamed the run on the bank on the Western press, which he said "has been covering it (the bank's troubles) in a negative and provocative way."

The Afghan Central Bank took over management of Kabul Bank this week, replacing its well-connected chief executive officer and chairman, The New York Times reported Friday.

White House spokesman Tommy Vietor said the U.S. government was supporting "the Afghan Central Bank's effort to uphold international standards."

Khalilullah Frozi, one of Kabul Bank's largest shareholders, said the bank had not lost as much as the $300 million it reportedly lost.

The government this week has already given the bank $100 million to cover the payroll for 250,000 public workers.

A bank collapse could threaten the country's security infrastructure because Kabul Bank manages military and police payrolls.