Citibank, acting under pressure from the New York City government, has declared it will liquidate all its loans to the South African government by next month and plans to make no more such loans "in the foreseeable future."
The new policy by the nation's largest bank was disclosed in a letter this week from bank Vice Chairman Hans Angermueller to New York City Comptroller Harrison Goldin. It came amid recent moves by New York officials to cut off hundreds of millions of dollars in city business from banks and corporations that maintain ties with the Pretoria government.
"This is kind of incredible, isn't it?" said assistant city comptroller Stephen Matthews about the Citibank letter yesterday. "We were talking big bucks here, and money speaks. It's as simple as that."
It was not immediately clear how large Citibank's outstanding loans to the South African government currently are. But Bill Koplowitz, Citibank's director of international public affairs, said yesterday the bank's last dealing with Pretoria came in October 1980, when it lent the South African government $50 million as part of a $250 million loan made by a syndicate that included four other European banks.
Koplowitz said he could not say how much of that loan was still on Citibank's books, but he said the bank's outstanding loans to the South African public sector were "modest, dwindling and will be eliminated" by March 31. He declined to say whether that debt will be liquidated by selling it to other banks or by accelerated repayment by the South African government.
The action by Citibank makes it the latest in a series of major U.S. banks that have moved in recent years to sever their dealings with the South African government in response to pressure from anti-apartheid activists. At least partly as a result, total U.S. bank loans to the South African public sector have dropped from $623 million in June 1982 to $343 million in September 1984, according to Federal Reserve Board figures.
Five states and at least 11 municipal governments -- including the District -- have passed laws mandating the divestment of at least some of their assets from banks and corporations that do business with the South African government. But last summer, the trustees of the New York City Employes Retirement System became the largest pension fund in the country to approve such a policy. That policy could have required the sale of about 222,800 shares of stock that the pension fund held in Citicorp., Citibank's holding company, Matthews said.
In addition, New York City Mayor Edward Koch this week introduced a new bill that, in most cases, would have prohibited city deposits in banks that underwrite securities or make loans to the South African government. This proposal could have affected about $500 million in city deposits in Citibank, according to Matthews.
Citibank spokesman Koplowitz declined to comment on whether the new policy was a direct result of the New York City initiatives. But he said it was reached by bank management after "an assessment of conditions that affect our business everywhere, both here and in South Africa."
Koplowitz also stressed that the new policy was part of a "continuous" evolution of bank policy relating to South Africa in which Citibank has repeatedly tightened its criteria on the types of loans it will make in that country. After riots in the black South African township of Soweto in 1976, Citibank first declared that it would only approve loans to the government that are of "direct and unique benefit" to the black population in that country.