An Associated Press report said the government Afghanistan has been seeking to privatize a major bank. The Ministry of Finance said on Tuesday the formerly named Kabul Bank would go under a new name in order to attract bids for privatization. Earlier attempts to attract favorable bids for the commercial bank last year had failed, said Ministry media adviser Najib Manalai.
The re-advertised New Kabul Bank was founded in 2004 and has been paying salaries of the government's security forces and army, rocked the country's economy in 2010. A report from the International Monetary Fund detailed a Ponzi-like scheme run Kabul Bank and had almost caused its collapse. Around USD861 million in loans were fraudulent and the money was pocketed by the bank executives' associates. The government had only recovered less than 10% of the missing funds.
The government of Afghanistan had extended a bailout plan to the commercial bank, costing over 5% of the country's gross domestic product (GDP) in the process. New Kabul Bank is being supervised by Da Afghanistan Bank (DAB), Afghanistan's central bank.
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