SunTrust (NYSE:STI) will end business relationships with players in the private prison industry, reports indicate. The decision comes on the back of uproar across the US concerning the manner in which migrant children are treated in detention centers.
A mass walkout could be in the offing
The Atlanta-based banking giant did not give a clear reason for the termination of the relationship. Particularly, SunTrust will cease to provide financial services to companies which have interests in immigration detention centers.
SunTrust is just one among a number of banking giants which have either severed or have announced plans to exit similar business relationships.
In June, Bank of America cited concerns by employees and other stakeholders as the reason for its decision to end exposure to the private prison industry. Three months before, JP Morgan Chase severed ties with the industry after an “elaborate evaluation process.”
Back in January, Wells Fargo took a bold step to pare back relationships with companies which operate correction facilities. In a report, the bank noted that its exposure to the companies was significantly low and that it would continue to divest in the industry.
Caving to political pressure
According to opposing voices, the decision by the banks merely a caving in to political activism. For starters, there has been a massive outcry in the US over reports of inhuman conditions federal detention centers. However, the government, led by the President, deny the reports terming them “phony and exaggerated.”
In a rebuttal to SunTrust’s exiting of the private prison industry, affected companies are blaming the bank for failure to properly interrogate the facts.
As per CoreCivic, an operator of correction facilities and an associate of SunTrust, the banking decisions are politicized. CoreCivic said in a statement that the decisions could scare other private sector companies from working with the government to find solutions to public problems. Meanwhile, CoreCivic expects SunTrust and other banking giants who have taken similar decisions to honor their contractual obligations.
SunTrust is a major name in Georgia and it comes top in metro Atlanta when it comes to deposits. The bank is in the process of merging its assets with BB&T to create Truist.