A Reuters witness reported hearing blasts soon after the attack began and gunfire could be heard coming from the branch of the Kabulbank in Jalalabad, which handles salaries for the Afghan police and armed forces, for several hours.

Gul Agha Sherzai, governor of Nangarhar province, of which Jalalabad is the capital, said 18 people had been killed, with civilians and members of Afghanistan’s security forces among the dead and wounded.

He said seven insurgents had attacked the bank, three of them detonating explosive vests inside the building.

Ahmadzia Abdulzai, a spokesman for the Nangarhar government, said fighting had gone on for several hours and described the scene as “chaotic.”

The motive for the attack was not immediately clear, although coordinated assaults by insurgents against government buildings and military bases have increased in recent years, especially in eastern provinces near the Pakistan border.

Insurgents often dress in the uniforms of Afghan security forces, or as women, for such attacks.

The Taleban later claimed responsibility, saying three suicide bombers had entered the bank when Afghan security forces were collecting their salaries.

Taleban spokesman Zabihullah Mujahid said in a text message to Reuters that “many” members of the security forces had been killed and that fighting was continuing.

It is rare for the Taleban to launch complex attacks with robbery as their primary motive.

Violence across Afghanistan reached its worst levels last year since the Taleban were toppled by US -backed Afghan forces in 2001. Both civilian and military casualties hit record levels, despite the presence of about 150,000 foreign troops.
 

“I was inside the bank when seven gunmen in border police uniform attacked,” said a government employee who identified himself only as Salman and was wounded in the attack.

“My brother was killed by them,” he said.

Another witness, Sediqullah Momand, said: “They shot the bank tellers first. I saw dead and wounded people inside the bank.”

Afghan President Hamid Karzai condemned the attack.

Traffic from Jalalabad to the capital, Kabul, was blocked by Afghan police and NATO-led International Security Assistance Force) (ISAF) troops, witnesses said. One man was seen earlier running from the area with his clothes covered in blood.

An ISAF spokesman in Kabul said the coalition was aware of an incident in Jalalabad and was investigating.

Kabulbank, is Afghanistan’s politically well-connected top private lender, and is mired in a corruption scandal that could have grave political consequences for Karzai and his government.

The International Monetary Fund has painted a grim picture of the government’s handling of the crisis, in which hundreds of millions of dollars have been put at risk through mismanagement, fraud and bad loans, and is considering whether to renew its support for Afghanistan.

That would trigger a review of other commitments by international donors, who provide billions of dollars a year in aid to Afghanistan.

The growing bank crisis is especially worrying because it coincides with efforts by foreign forces to begin the gradual process of withdrawing their troops and handing security responsibility to Afghan forces by 2014.