JOHANNESBURG, JUNE 16 -- Citicorp, the largest bank in the United States, announced today that it is selling its South African subsidiary to a local bank for $65 million.
Under increasing pressure by U.S. anti-apartheid groups to sever connections with South Africa, Citicorp has agreed in principle to sell its interests here to the First National Bank of Southern Africa Ltd., which itself was the product of a disinvestment move by Barclays Bank of Britain earlier this year.
More than 100 U.S. firms have sold their interests in South Africa amidst mounting pressure to extend sanctions against the Pretoria government in order to hasten the dismantling of apartheid, the system by which law and custom racially separates the 23 million black majority and the 4.5 million whites.
The announcement follows confirmation of reports on Sunday that Ford Motor Co. is negotiating to withdraw from South Africa by transferring most of its 42 percent interest here to a trust fund to be set up for local employes.
Citicorp Chairman John S. Reed told reporters from New York that the sale will be effective July 1.
Citicorp, which has more than 300 employes in South Africa, operates Citibank N.A. Ltd., which provides financial services to major corporations, and Diners Club South Africa Ltd., which services credit card customers. It maintains branches in here and in Durban. Citicorp refused to reveal if it will sell the credit card subsidiary.
Chris Ball, managing director of First National, said, "We intend maintaining the bank as an independent specialist subsidiary serving the large corporate market." He said all staff under managing director David Lawrence will be retained.
"We believe that the additional skills and expertise that this business unit has in local and international trading, as well as wholesale banking, will enhance First National's thrust into the corporate market of South Africa," Ball said.
He said Citibank South Africa's after-tax profits through the remainder of this year are not expected to exceed $4.5 million. He said the acquisition will have no effect on First National's earnings per share for the fiscal year ending Sept. 30.
"The acquisition will enable First National to expand and enhance its investment and merchant banking base, while providing a unique opportunity to create a second treasury and dealing operation to engender a healthy and profitible competitive player in these markets within the group," Ball said in a statement.