Citi Pledges to Become Antiracist, Review Internal Policies
(Bloomberg) -- Citigroup Inc. will spend $1 billion over the next three years on efforts to help close the racial wealth gap as it seeks to become an antiracist institution.
More than half of the funds will go toward supporting homeownership for people of color and affordable housing by minority developers, Citigroup said in a statement Wednesday. The bank also earmarked $350 million for procurement opportunities for Black-owned suppliers.
“We are in the midst of a national reckoning on race, and words are not enough,” Chief Financial Officer Mark Mason, one of Wall Street’s most senior Black executives, said in the statement. “We need awareness, education and action that drive results.”
Citigroup found that if the U.S. could instantly end the most severe forms of economic discrimination against African Americans, it could give a $5 trillion boost to gross domestic product over the next five years.
During the past 20 years, race-based inequalities shaved about $16 trillion from GDP, the New York-based firm estimated in a study released Tuesday. Citigroup said it looked at the costs of lost wages, fewer opportunities for higher education and less access to home and small-business loans.
“What this report underscores is that this tariff is levied on us all and, particularly in the U.S., that cost has a real and tangible impact on our country’s economic output,” Citigroup Vice Chairman Raymond J. McGuire said in the report. “We have a responsibility and an opportunity to confront this longstanding societal ill.”
Citigroup on Wednesday said as part of its goal of becoming an antiracist institution, it will work to identify and end discrimination in its own practices and policies.
The company said it would develop standards to ensure its software eliminates biases, and it will ask the outside marketing, communications and legal partners it works with to ensure people of color are assigned to the bank’s accounts.
Citigroup will also expand its community-lending team within its U.S. consumer bank, and increase the number of correspondent lenders as part of its efforts to increase minority borrowers’ access to mortgage products.
Citigroup has long worked with minority depository institutions, or MDIs, to help improve financial inclusion in the U.S. For a bank to be classified as an MDI, 51% or more of the voting stock must be owned by minority individuals or a majority of the board and the community it serves must be comprised of people of color, according to the Federal Deposit Insurance Corp.
On Wednesday, Citigroup said it would invest as much as $50 million in MDIs and invite them to participate in $50 million of loan opportunities as a way to generate extra revenue.
The lender will also encourage more minority-owned banks and community-development credit unions to participate in a program that eliminates out-of-network fees at Citigroup’s ATMs for customers of those banks.
“Addressing racism and closing the racial wealth gap is the most critical challenge we face in creating a fair and inclusive society, and we know that more of the same won’t do,” Chief Executive Officer Michael Corbat said in the statement. “This is a moment to stand up and be counted, and Citi is committed to leading the way.”
©2020 Bloomberg L.P.