Chase Manhattan Bank has decided to make no new private loans to South Africa, a move that comes as other major U.S. banks are also reducing their lending to private companies there.
Although most major U.S. banks that lend to the South African firms said Thursday that they have not changed their policies, at least one, Bank of America, said it is not ruling out changes if conditions in South Africa worsen. And two other banks, Security Pacific and First Interstate Bank of California, said they have been consciously reducing their involvement in recent months.
"We're just letting it shrink," First Interstate spokesman Paul Minch said, noting that his firm's lending there is already relatively small--$30 million. He said the decision was "based on the political situation there."
Recent Federal Reserve Board data indicate that U.S. bank lending to South Africa dropped about 12% between December, 1984, and March, 1985--to about $4.2 billion, from $4.7 billion. Almost all the decline was in loans to banks in that country.
Such a drop, if sustained, would reverse what has been a generally upward trend in U.S. lending to the South African private sector in recent years.
Much of the latest drop presumably is due to banks' not renewing their loans. The bulk of U.S. bank lending to South Africa is in short-term loans and trade financing, with maturities of a year or less.
Chase's decision, confirmed Thursday by banking sources, was made in response to deteriorating political and economic conditions in South Africa.
The New York bank's spokesman, Fraser Seitel, said, however, that it is not closing its 10-employee office in South Africa, although it is monitoring the situation.
Chase's total outstanding loans to South African private business is about $400 million, sources said.
Anti-apartheid activists said Thursday that they hope the decision by Chase, the nation's third-largest bank, will encourage other major financial institutions to adopt similar policies.
The Chase move indicates that "operating in South Africa is becoming more and more tenuous," said Richard Knight, director of corporate research for the American Committee on Africa, an anti-apartheid organization that monitors U.S. corporate activity in South Africa.
However, Barclays Bank, the major British firm, said Thursday that it will maintain its $9.6 billion in assets in South Africa.
At least 30 major U.S. banks, including Citibank, Bank of America and Security Pacific, have policies prohibiting lending to the South African government or agencies. Some had enacted those bans as early as 1976.
But only the Bank of Boston, and now Chase, among major banks are known to have enacted policies against making new loans to private firms. At least 25 major banks are known to lend to South African business, and three of those--Citibank, Chase and NCNB, a North Carolina institution--maintain offices there.
Anti-apartheid activists contend that lending to private banks and corporations in South Africa is just as harmful as making official loans, since those companies can in turn lend to the government.
Spokesmen for Citibank, Bank of America, Manufacturers Hanover Trust, First National Bank of Chicago and Continental Illinois said Thursday that their institutions are not changing their policies, although the Bank of America spokesman said the firm is reviewing its policy and might switch "if necessary."