U.S. Banks and South Africa on richardknight.com
The following article appeared in International
Banking Campaign Against South Africa Newsletter No. 2, Winter 1986/7
published by End Loans to Southern Africa (ELTSA), London. This was a newsletter produced for the
campaign against international banks' support for apartheid. It was a joint project of the Programme to
Combat Racism of the World Council of Churches, based in Geneva and ELTSA.
For more information on U.S. bank loans to South
Africa see Testimony of Richard Knight on
the proposed Rule for Ant-Apartheid Classification of Banks and South African
Activities of Particular Banks (December
1991), Citibank and South Africa (September
1986), Sanctions, Disinvestment
and U.S. Corporations (1990)
and U.S. Banking on South African
Apartheid (November 1976).. See also U.S. Banks Cut Loans
Sharply to South Africa by Nicholas D. Kristof,
New York Times (August 3, 1985).
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U.S. Banks and South Africa
The new U.S. sanctions legislation is a
major victory for the American anti-apartheid lobby. RICHARD KNIGHT of the
American Committee on Africa puts the Act into context
of the banking campaign.
Campaigns in the United States against bank loans to
South Africa go back to the mid-1960s
when the American Committee on Africa launched the Committee of
Conscience Against Apartheid following the Sharpeville
massacre in South Africa. In 1977, following the Soweto uprising, ACOA was again
instrumental in forming the Campaign to Oppose Bank Loans to South Africa. Currently, ACOA is at the center of the
divestment campaign, which has succeeded in getting 19 U.S. states, 70 cities, 13
counties and 116 colleges to take economic action against companies that do
business in South Africa.
October 2, 1986, the U.S. Congress passed the Comprehensive Anti-Apartheid Act
of 1986, banning new bank loans to both the public and private sector. This act, which was passed over President
Reagan's veto, was a major victory for the anti-apartheid movement in the United States. Currently, U.S. banks have $3.1 billion in
outstanding loans to South Africa, down from $4.7 billion in
the act, despite its name, is hardly comprehensive. It allows for continued rollover of old
loans, and permits the continuation of trade loans. For this reason, anti-apartheid activists are
now increasingly focusing on trade loans and correspondent bank relationships.
first major set of victories was won when many U.S. banks agreed to end loans
to the public sector in South Africa, a policy adopted by may
lenders by the end of 1984. In early
1985, an increasing number of banks extended their no loans policy to the
private sector. This included the First
Bank System, the Bank of Boston, and Norwest Corp. The crisis came to a head when one U.S. bank,
Chase Manhattan, quietly informed its customers in South Africa that it would not make any
new loans or roll over old loans. The
financial crisis caused by the refusal of U.S. banks to renew billions of
dollars of loans forced the South African government to declare the debt
the only U.S. bank operating in South Africa as a commercial bank, has
become a main target of American activists.
Citibank was also the target for the United Democratic Front, which
organized a sit-in at Citibank's Johannesburg office in April 1985. Citibank is estimated to have some $800
million in dollar loans to South Africa. In addition, even after the debt moratorium
Citibank continues to make loans from rand deposits and 'blacked dollars' held
by its subsidiary in South Africa. Citibank has been growing fast in South Africa, with assets increasing in
rand terms by 72.8% in 1985 and by 152.4% in 1984.
growing disinvestment campaign, especially at the state and municipal level,
has been a key development in the anti-apartheid movement in the U.S. New York City's 1985 bill which prohibits
deposits of city funds in banks that make loans to the South African government
and its agencies forced many banks, including Citibank, to agree to end all
public sector loans. Barclays' U.S. subsidiary has also been a
target of anti-apartheid action in Rockland County, NY. In Los Angles, where the city has a strong
anti-apartheid law, several banks, including Bank of America, announced that
they would make no new loans to the public and private sector. Even NCNB, a bank that has been one of the
larger U.S. lenders to South Africa, succumbed to
anti-apartheid pressure and ended all loans.
the dramatic growth of the disinvestment campaign, a growing number of U.S. corporations are pulling
out of South Africa. More that 60 companies have done so in the
past two years, although many, like IBM and General Motors, continue to do
business in South Africa through licensing
agreements. As this happens, a new focus
of the U.S. anti-apartheid movement
will be trade and technology transfer.
Especially in trade, banks play a key role. Without financing from U.S. banks, South Africa-U.S.
trade would be sharply hit. U.S. banks will continue to be a
target of the anti-apartheid movement as long as they continue to finance this