New York Issues Rules on S. Africa
Despite the Bush administration's decision to lift economic sanctions against South Africa, New York City pushed ahead Wednesday with its efforts to fight apartheid.
Mayor David Dinkins released final rules describing what relationships with South Africa will hurt a bank's chances of gaining city deposits. The regulations take effect in 30 days, but a formal rating system will take longer to put in place.
"The rules we promulgate today keep the pressure on the government of South Africa by telling our banking community that doing business with an apartheid system is a severe liability at home," Mr. Dinkins said in a prepared statement.
A Tough Policy
A year ago, the mayor signed one of the toughest anti-apartheid measures in the country, barring the city from doing business with companies - including commercial banks - that have ties to South Africa. The city said it kept deposits in 20 banks, with an average balance of about $250 million each last year.
In rating banks, the city will consider whether an institution maintains an office or employees in South Africa, and whether it provides loans to the country, acts as a depository to the government, or maintains correspondent banking relations.
"Banks are not pleased about the prospect of being rated in this way," said Warren Traiger, a New York lawyer specializing in banking regulation. But the rules could become moot, he said, as the South African government continues to dismantle segregation laws.
Acknowledging the improved conditions, President Bush on Wednesday formally lifted a wide range of trade investment sanctions against South Africa.
Ratings Expected in '92
New York City said the rating system should be in use by early next year. Administrators will then determine whether the city should shift its business to other commercial banks.
"The rules will have minimal impact on us," said Kenneth Herz, a spokesman for Chemical Banking Corp., which conducts no business in South Africa. "We would expect a very favorable rating." [Tabular Data Omitted]