BNP Paribas backs away from U.S. private prison industry

FILE PHOTO: A BNP Paribas logo is seen outside a bank office in Nantes, France, February 5, 2019. REUTERS/Stephane Mahe

NEW YORK (Reuters) - France’s BNP Paribas SA on Friday said it will no longer finance U.S. private prison operators, the first foreign bank to distance itself from a sector shunned by domestic peers amid controversy over Trump administration detention policies.

Company spokesman Ilias Catsaros told Reuters of the change in policy. The decision does not affect existing contractual agreements.

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.

BNP Paribas 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. Last year lenders raised roughly $1.8 billion for CoreCivic and GEO Group, according to Refinitiv data.

Earlier this year, SunTrust Banks Inc, Wells Fargo & Co, JPMorgan Chase & Co and Bank of America Corp made similar commitments to phase out lending to private prison companies.

Private prison operators have argued that activists mischaracterize the nature of their facilities, and called the decisions politically motivated.

“It’s unfortunate that misleading political activism has been allowed to impact a more than a decade-long banking relationship,” GEO Group spokesman Pablo Paez said.

Editing by Cynthia Osterman and Chizu Nomiyama