SunTrust to stop financing private US prison operatorsPosted On: Jul. 8, 2019 3:31 PM CST
(Reuters) — SunTrust Banks Inc. will stop financing operators of private prisons and immigration holding facilities, it said on Monday, becoming the latest lender to distance itself from a sector associated with the Trump administration's policies.
"This decision was made after extensive consideration of the views of our stakeholders on this deeply complex issue," the Atlanta-based company said in a statement.
SunTrust is one of several banks that have underwritten bonds or syndicated loans for at least one of the major private U.S. prison operators, CoreCivic Inc. and GEO Group Inc.
In 2018 lenders including Bank of America Corp. and Wells Fargo & Co. raised roughly $1.8 billion in three deals for CoreCivic and GEO Group, according to Refinitiv data.
Banks have been under pressure to cut ties with the private prison industry since U.S. President Donald Trump's restrictions on immigration raised concerns about detention center conditions. The centers account for about two-thirds of the people held by U.S. Immigration and Customs Enforcement, S&P Global Ratings estimated last year.
Earlier this year, Wells Fargo, JPMorgan Chase & Co. and Bank of America made similar commitments to phase out relationships with private prison companies.
Executives of big banks have been confronted by activists at annual shareholder meetings and grilled by lawmakers about their role in the industry. Private prison operators have argued that activists mischaracterize the nature of their facilities.
“It’s unfortunate that misleading political activism has been allowed to impact a decade-long banking relationship," said Geo Group spokesman Pablo Paez.
CoreCivic and Geo Group have said that none of their facilities housed unaccompanied children.
"This decision is about caving to political pressure," said Brandon Bissell, manager of public affairs at CoreCivic on Monday. "It sends a terrible message to others in the private sector."
SunTrust's executives are slated to testify about its proposed merger with BB&T Corp. before the U.S. House of Representatives Financial Services Committee later this month.
Representative Maxine Waters, who chairs the committee, has asked regulators to withhold approval for the deal, announced in February, until the panel conducts a thorough review.
In response to activism last year, Bank of America, Citigroup Inc. and BlackRock Inc., the world's largest asset manager, said they were limiting business with gunmakers. But others, including Wells Fargo, declined to follow suit, and filings show firearms companies retain access to a wide range of financing options.