American Security Bank of Washington, one of the initial five banks in the United States to establish correspondent banking relations with China since 1973, is expecting a significant growth in loan business and financial service for the Chinese.
Carleton Stewart, chairman of the bank, forecast yesterday that China's push for more American tourism coupled with a dramatic surge in plans for economic modernization will lead to normal commercial bank ties with U.S. institutions - as soon as Congress agrees to legislature that would resolve an impasse over bank accounts frozen during the Korean war.
Ties between China and American Security, the area's second-largest bank, began in 1973 when China opened its liaison office in Washington and established its main banking account at the D.C. institution, one of only two accounts at American banks (a smaller account in New york handles accounts for China's mission to the United Nations).
In May 1977, Stewart was invited to Peking by the Bank of China along with his wife Alicia, who had grown up in Shanghai and attended grade and high schools there.
Soon thereafter, American Security became the fifth U.S. bank with a correspondent relationship, leading Stewart to note yesterday that "the Bank of China has recognized that the U.S. financial centers are Washington, San Francisco, Chicago and New York . . . [because that's where banks are located with which] they made their connections."
An article on U.S. bank ties to China in yesterday's Washington Post incorrectly named the Washington institution with a correspondent relationship as American Security's archrival, Riggs National Bank.
Stewart said he has been invited to Peking again next May, and noted that he is active in directing American Security's growing China banking ties.
Currently, because of the impasse over frozen accounts, the D.C. bank is limited to such growing but non-commercial transactions as drafts by which Chinese transmit funds to their country, telegraphic and mall transfers, travel letters of credit used by the Bank of China for traveling Chinese delegates and financing the visiting delegations' U.S. tours once they arrive in Washington, where they come first.
Grain financing talks are in progress here and Stewart said his institution may take part. He also noted that because of American Security's established ties, the D.C. institution knows early about potential transactions involving U.S. technology and sales.
Once the frozen funds issue is resolved, he said a full range of commercial lending can begin - even without normalization of diplomatic relations between Washington and Peking. Last week, the Treasury proposed that, banks pay interest on frozen foreign assets, as one step toward resolving this issue. Stewart said less than $200 million in frozen assets are involved and that is "stupid" for some members of Congress to continue holding up an overall solution to the conflict.