July 8, 2019 / 2:28 PM / 2 months ago

SunTrust to stop financing companies that manage private prisons

NEW YORK, July 8 (Reuters) - SunTrust Banks Inc said on Monday it will not provide future financing to companies that manage private prisons and immigration holding facilities, becoming the latest lender to distance itself from a sector that has become tied to the Trump administration’s immigration 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 prison operators in the United States, CoreCivic Inc and GEO Group Inc.

In 2018, banks, including Bank of America Corp and Wells Fargo & Co, raised roughly $1.8 billion in debt over 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 began raising concerns about the conditions inside detention centers. Private detention 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 existing 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 private prison industry.

SunTrust is under a microscope due to its pending merger with BB&T Corp.

SunTrust’s executives are slated to appear before the U.S. House of Representatives Financial Services Committee later this month to answer questions about the proposed tie-up. Representative Maxine Waters, who chairs the committee, has asked regulators to postpone approving the deal until the committee conducts a thorough review.

Similar moves by banks have proven to be mostly symbolic because other lenders are filling the void left by the big banks.

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 in various ways. But others, including Wells Fargo, declined to follow suit, and filings show firearms companies retain access to a wide range of financing options. (Reporting by Imani Moise Editing by Paul Simao)

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