Bush Move Won't Spur U.S. Lending In S. Africa
NEW YORK - U.S. banks have no immediate plans to resume lending to South Africa despite a move by President Bush to lift sanctions against business dealings with that country.
But the institutions do not rule out resuming business if South Africa continues to liberalize laws that discriminate against the country's black-majority.
"We're not changing our policies, but we hope that the situation at some time will be such that we will be able to participate in normalized business," a spokesman for J.P. Morgan & Co. said last week.
Others Have Similar Views
Other major U.S. banking companies, including Citicorp, Chase Manhattan Corp., Manufacturers Hanover Trust Corp., and BankAmerica Corp., expressed similar views.
"We're not going to do anything, but we are assessing the situation as it develops," said a spokesman for Manufacturers.
The amount that U.S. banks individually lend in South Africa cannot be confirmed because the loans are less than the amount required for disclosure.
Lending Restrictions Lifted
However, informed sources said Citicorp, believed to be the biggest lender, has about $600 million in loans, followed by Chase, with nearly $280 million, and Manufacturers, with about $220 million.
The President's decision Wednesday lifted restrictions on new lending to South Africa that was imposed on U.S. banks under the 1986 Anti-Apartheid Act.
U.S. banks have steadily reduced their outstanding loans since the sanctions were adopted.
According to the Federal Reserve Board, U.S. banks had $2.1 billion in loans to South Africa on March 31, down from $2.4 billion in September 1989 and around about $5 billion in 1984.
Another factor holding back closer ties is the fear of losing business with municipalities that curb dealings with corporations that do business with South Africa.
New York Issues New Rules
In fact, after the President's action, New York City's Department of Finance issued new rules that limit city agencies from depositing funds with banks that have offices, plants, employees, investments, loans, trade credits, or deposits linked to South Africa. David N. Dinkins, New York's mayor, maintained that South Africa has not moved far enough toward democracy yet.
Financial institutions "are still looking over their shoulders at cities and states that refuse to do business with banks that have ties," said Timothy Smith, executive director of the Interfaith Center for Corporate Responsibility, a New York-based nonprofit organization that monitors investments and business dealing with South Africa.
Mr. Smith said the Interfaith Center would continue to oppose new lending to South Africa until that country allowed its black majority to vote.
Foreign Banks Move Faster
Foreign banks, which do not face similar sanctions, have moved faster to resume financial ties with South Africa following a decision by the European Community earlier this year to lift sanctions against South Africa.
Standard Chartered Bank PLC, a British bank which sold off its South African unit in 1986, last week said that it plans to open a representative office in Johannesburg August 1.
Switzerland's central bank also said last week that is lifting limits on the amount that South Africa can raise on Swiss capital markets and abolished requirements that Swiss commercial banks obtain permission from the central bank to make loans to South Africa.
Societe Generale, one of France's biggest banks, became the first foreign bank to return to South African several weeks ago by purchasing International Bank of Johannesburg, a small South African bank.