WASHINGTON - For the first time since the U.S. government lifted economic sanctions in 1991, the Federal Reserve Board gave a South African bank permission to open here.
The Standard Bank of South Africa, a $20.2 billion-asset institution based in Johannesburg, can solicit loans for its head office, provide liaison services for South African and U.S. companies, and develop correspondent banking relationships.
Congress imposed sanctions on South African banks as part of the Comprehensive Antiapartheid Act of 1986. President Bush lifted those sanctions in October 1991 to reward the country for dropping the apartheid system and adopting a democratic form of government.
The Fed said March 22 that a review required by the Foreign Bank Supervision Enhancement Act of 1991 found that South African regulators subject the bank to a "significant degree" of supervision.
Paul S. Pilecki, a partner at Shaw, Pittman, Potts & Trowbridge, said the Fed's decision makes it easier for other South African banks to set up shop here.
"It shows progress, in that they've done quite a bit of analysis with South Africa," Mr. Pittman said. "So it shouldn't be difficult for them to take the next step."
The South African Reserve Bank establishes capital and liquidity requirements, evaluates the bank's financial performance, and monitors compliance with applicable laws.
The reserve bank also requires Standard Bank to submit regular financial reports, and it requires both internal and external audits of the bank's domestic and international operations.
The Fed also found that Standard Bank, which operates 650 domestic branches and manages operations in two foreign countries, possesses the managerial expertise to run a New York representative office.
The application is one of about a dozen that the Fed has approved since Congress passed the foreign bank supervision act. Other countries to receive approvals include Argentina, Japan, Mexico, Italy, and France.
Mr. Pilecki said he hopes this recent spate of Fed approvals indicates that the Fed is finally moving on foreign bank applications, some of which have been pending for more than two years.
"The logjam is starting to break up," he said.
