New York Times on Bank Loans
to South Africa
On richardknight.com
The
following article appeared in the New York Times. The article appeared
shortly before the South African government was forced to declare a debt
repayment standstill. More articles on bank
loans to South Africa can be found at Campaign for Sanctions
and Disinvestment.
|
The New York Times August 3, 1985 U.S. Banks Cut Loans
Sharply to South Africans By Nicholas D. Kristof After years of
substantially increasing their lending to South Africa, American banks have
begun to cut back sharply on such loans, according to figures released by the
Federal Reserve Board. In the first three months
of the 1985, the period covered by the latest figures, the total owed by the
borrowers in South Africa to American banks dropped by 10.8 percent, to less
than $4.2 billion, from $4.7 billion. "This is the exact
reversal of what happened for years, with banks steadily increasing their
loans," said Richard V. Knight, head of corporate research at the
American Committee on Africa, a New York group that has put pressure on banks
to stop all South Africa loans. He added, "It's hard
to say what's going to happen longer term, but I think bank loans will
decrease." Other organizations as
well have put considerable pressure on American banks to halt their lending
to borrowers in South Africa. Many big
banks, beginning in about 1976 and culminating with a flurry this spring,
adopted policies prohibiting new loans to the South African government and
its agencies. Private-Sector Loans Soared However, while American
bank lending to the South African public sector has been halved since 1982,
to a total of $302.2 million as of March, loans to the private sector have
soared. In particular, loans to South
African banks skyrocketed to more than $3.5 billion as of September, from
less than $500 million in 1979. But this category, like
the others, showed a sharp drop since the September peak in lending to South
Africans. As of March, loans by
American banks to South African banks were below $2.8 billion. Loans to the private sector, except for
banks, totaled $1.1 billion. Bar by Security Pacific Some bankers say the
totals are likely to continue to drop sharply, partly because over the last
year several institutions have said they will no longer lend even to the
private sector in South Africa. The
Chase Manhattan Corporation is the best known of the companies to have taken
such a stand. Others that have done so
include Bank of Boston Corporation, the Seafirst Corporation, the Norwest
Corporation, Harris Bankcorp Inc., Wells Fargo
& Company and the Mellon Bank Corporation. In addition, the Security
Pacific Corporation said yesterday that it had in practice, though not as a
matter of policy, not lent any money to South Africa for several months. "Based on daily economic and credit
analyses, we are not currently making private-sector loans to South
Africa," said Susan Taha, a senior vice
president. The bank exposure to South
Africa could diminish quickly because the great bulk of the loans are
short-term credits. The March figures
show $3.5 billion maturing in one year or less, $600 million maturing in one
to five years and just $58 million maturing over more than five years. South Africa ranks 20th
in the size of loans from American banks, with about a bit more than 1
percent of total loans to foreign borrowers.
It ranks behind many developed countries, such as Australia and Spain,
and also behind some large Latin American borrowers, such as Mexico and
Brazil. |