NEW YORK–(Business Wire)–Citi and the Citi Foundation today announced initial results generated from their $1 billion in strategic initiatives to help close the racial wealth gap and increase economic mobility in the United States. Announced in September 2020, Citi’s Action for Racial Equity is a comprehensive approach to 1) providing greater access to banking and credit in communities of color, 2) increasing investment in Black-owned businesses, 3) expanding homeownership among Black Americans, and 4) advancing anti-racist practices in the financial services industry.
There is clear momentum behind this work across Citi to address the barriers that impede communities of color from building generational wealth. Among the progress detailed below, Citi is more than half of the way to its $100 million commitment to Minority Depository Institutions (MDIs) that are expanding banking and credit access in communities of color. Citi will invest more than $200 million – out of a $550 million three-year commitment to affordable housing – in five equity funds that will be co-managed by Black investment managers to preserve multi-family affordable rental housing in cities all across the country. Citi is collaborating with the cities of Los Angeles and San Jose to provide college savings accounts for public school students, while also working with the National Urban League to offer the Citi® Access Account Package that includes no fee savings and checking products through its network.
“Action for Racial Equity was meant to be a three-year goal, but our teams have matched the urgency these issues deserve, making incredible progress towards that goal in just over six months,” said Jane Fraser, Citi CEO. “We know that many are rightfully calling on banks and other big companies to put real action behind their commitments. Today, we’re sharing what we’ve done to date to show how Citi is committed to real change, and to be clear and transparent about how far we have to go. We are determined to do everything we can to help close the racial wealth gap in our communities and continue to do the work to become an anti-racist institution.”
“The financial inequality and other systemic problems people of color face will not go away until we confront them head on – and that’s what we’re working towards here at Citi,” Mark Mason, Citi CFO said. “Citi is focused on ensuring that people of color have the same access to the financial tools and resources that benefit other groups. Doing so is a critical component of the work that needs to be done to close the racial wealth gap.”
“Equity investments are critical to our community impact but Citi is much more than an investor in Optus. Citi is helping us grow our mission of building wealth, especially among Black-owned businesses by creating new opportunities to grow our revenue and increase our impact in the community,” said Dominik Mjartan, President & Chief Executive Officer, Optus Bank.
“Children have unlimited potential, and the last thing that should hold them back is the future cost of education,” said Nuny Martinez, Los Angeles City Council President (Council District 6). “I’m proud that the City of Los Angeles has partnered with Citi, LA County and the LA Unified School District to create Opportunity LA- Investing in LA’s Children to give every child in Los Angeles the critical building block for economic success and through this, helping to close racial wealth gaps.”
“Affordable and safe bank accounts are essential for Black households working to build financial security, and we are excited to participate in the new Citi Affordable Access Banking Initiative,” said Marc Morial, President and CEO, National Urban League. “With no monthly service fees, overdraft fees, or minimum balance requirements, Citi® Access Accounts help remove barriers to economic opportunity. We look forward to sharing this beneficial tool with participants in financial literacy programs at Urban League affiliates, who serve as first-responders in the fight for racial and economic justice.”
“At MoCaFi, our work is focused on closing the wealth gap and reimagining how financial services can transform communities into places where everyone can thrive regardless of socio-economic status,” said Wole Coaxum, Founder & CEO of MoCaFi, a Citi Impact Fund investee. “In our conversations with Citi, it became clear that we had a shared vision for bringing financial equity and sustainability to communities of color. So we’re thrilled Citi has invested in our company and look forward to continued progress in the future.”
As part of Action for Racial Equity, Citi’s businesses are focused on four key outcomes:
GOAL #1: EXPAND BANKING AND ACCESS TO CREDIT IN COMMUNITIES OF COLOR
What Citi has done so far:
Launched a comprehensive approach to collaborating with Minority Depository Institutions (MDIs), providing equity investments and curated engagement through revenue generating and capacity building opportunities that support sustainable growth.
- As part Citi’s $100 million goal in support of MDI growth and revenue generation, allocating nearly $50 million in growth capital to MDIs to strengthen their ability to serve racially diverse households and entrepreneurs. To date, Citi has made equity investments in the following MDIs: Broadway Financial Corporation, Citizens Trust Bank, Mechanics & Farmers Bank, OneUnited Bank, Optus Bank, and Unity National Bank of Houston with legal pro bono advice provided by Paul, Weiss, Rifkind, Wharton & Garrison LLP.
- Closed nearly $15 million out of $50 million in affordable housing loan participation opportunities for MDIs to generate revenue and build their capacity to invest in larger transactions.
- Through collaboration with Deloitte and the National Bankers Association – Citi established a technical assistance program to support MDIs’ talent development, enhance technology, and expand business networks.
Expanded access to Citi products and platforms in collaboration with community and municipal partners to support communities of color.
- Launched a collaboration with the National Urban League to serve Black households by expanding access to the Citi® Access Account Package that includes low-cost savings and checking products with Urban League affiliates in Philadelphia, PA; Seattle, WA; Hampton Roads, VA; and St. Louis, MO.
- Signed a contract with the City of Los Angeles to launch a school-based children’s savings program called Opportunity LA, which will provide no-cost college savings accounts for students in LA’s Unified School district.
- Collaborated with the City of San Jose to provide no-cost college savings accounts for local public schools through the Citi Start Saving® platform as part of San Jose Aspires.
GOAL #2: INVEST IN BLACK ENTREPRENEURSHIP
What Citi has done so far:
- As part of Citi’s commitment of $50 million in additional impact investing capital for Black entrepreneurs, 6 of the first 16 Citi Impact Fund investments were directed to Black founders, accounting for 18% of the Fund’s equity invested to date.
- Spent $875 million with diverse suppliers in 2020, including $354 million with Black-owned businesses alone. On track to increase Citi business procurement spend with certified diverse suppliers to $1 billion annually by 2023.
GOAL #3: INVEST IN AFFORDABLE HOUSING AND PROMOTE THE GROWTH OF BLACK HOMEOWNERSHIP
What Citi has done so far:
- As part of Citi’s $550 million goal to support homeownership for people of color and affordable housing by minority developers, in final stages of committing $200 million of equity to the preservation of affordable and workforce housing projects that will be co-managed by five Black investment managers. The co-managers were sourced by Citi Community Capital through a competitive RFP process and selected by an expert advisory committee.
Despite Action for Racial Equity’s significant progress, there are other challenges that still require attention, especially in homeownership. While the rate of Citi mortgage applications and originations rose last year among Asian homeowners, it declined for Black and Hispanic consumers. Citi is committed to addressing this decline by expanding its community lending team and resources to support Black and Hispanic homeownership across the U.S.
- In addition to the previously announced plan to expand the U.S. Consumer Bank’s community lending team and its network of correspondent lenders to support Black and Hispanic homeownership, Citi continues to invest in its digital mortgage capabilities to better reach all communities, including underserved markets.
- Citi is expanding Community Lending products and programs, while leveraging its mortgage portfolio and capital to further enable homeownership. This includes Citi’s HomeRun program, which requires low down payments and removes mortgage insurance requirements for eligible borrowers with low to moderate incomes, and its Lender Paid Assistance program, which provides eligible homebuyers a credit of up to $5,000 to lower closing costs to make buying a home more affordable.
- Citi is continuing to strengthen relationships with homeownership counseling groups, such as HomeFree-USA, and is participating as a member of the Office of the Comptroller of the Currency’s Project REACh Homeownership workstream to promote financial inclusion through greater access to credit and capital.
GOAL #4: STRENGTHEN CITI’S POLICIES AND PRACTICES IN ORDER TO BECOME AN ANTI-RACIST INSTITUTION
What Citi has done so far:
- Issued first affordable housing bond with a notional value of $2.5 billion, the largest-ever social bond from an issuer in the private sector. Citi utilized a syndicate of minority and women owned broker dealers, with Black-owned broker-dealers comprising 75% of the joint-lead managers. The use of proceeds from the bond will finance the construction, rehabilitation and preservation of quality affordable housing for low-and moderate-income populations in the U.S.
- Issued $2.5 billion bond with an underwriting syndicate exclusively comprised of Black-owned broker-dealers, reinforcing the firm’s commitment to increasing racial equity in the capital markets and broader financial services industry.
- Piloted a municipal finance modeling training program, in collaboration with Citi and minority-owned, municipal broker-dealers and advisors, to support talent development, promote networking, and deliver access to industry-leading bankers in the field.
- To date, a majority of Citi’s law firm partners in the U.S. have volunteered to participate in the bank’s efforts to increase representation of diverse attorneys on Citi matters.
- Successfully updated the Citi Environmental and Social Risk Management Policy for project-related financing to strengthen due diligence processes for environmental justice and social impacts on communities of color.
In addition to Citi’s business initiatives, the Citi Foundation has granted more than $15 million of its three-year, $100 million target to invest in community change agents addressing racial equity, including new efforts to expand entrepreneurship and employability among youth of color and support small businesses owned by people of color. This work includes a recently announced $1 million grant to MENTOR to propel racial justice and equity efforts and $3.5 million in support of Historically Black Colleges and Universities (HBCUs) and young Black students and leaders, with grants to UNCF and the Thurgood Marshall College Fund. To help explore structural inequities that made Black communities more vulnerable to COVID-19 and set recommendations for a full and equitable economic recovery for Black Americans, the Citi Foundation has commissioned The Joint Center for Political and Economic Studies to launch an 18-month research project.
“The Joint Center’s Data for Black America project aims to help public and private sector decision-makers better understand the needs of Black communities,” said Spencer Overton, President of the Joint Center for Political and Economic Studies. “There’s a lot of data out there about how different groups are faring in the economy, but most data miss a deep analysis on the specific needs of different segments of the Black community, such as Black women, Black parents, or Black workers without college degrees. Support from the Citi Foundation will enable the Joint Center to close those gaps in the data and foster more inclusive policies to drive our national economic recovery.”
Citi and the Citi Foundation’s progress toward their Action for Racial Equity goals are part of the following resources committed through the end of 2023:
- $550 million to support homeownership for people of color and affordable housing by minority developers
- $350 million in procurement opportunities for Black-owned business suppliers
- $50 million in additional impact investing capital for Black entrepreneurs
- $100 million to support Minority Depository Institutions’ (MDI) growth and revenue generation
- $100 million in Citi Foundation grants to support community change agents addressing racial equity
To further its commitment, Citi has engaged in public-private collaborations that aim to help address racial equity. In December, Citi was one of the first institutions to sign the Office of the Comptroller of the Currency’s Project REACh Pledge to promote the vitality of Minority Depository Institutions and homeownership. Most recently, Citi signed on to the Corporate Call to Action: Coalition for Equity & Opportunity (CEO), launched by the Connecticut State Treasurer and the Ford Foundation.
For more information on Action for Racial Equity, and the ways in which we’re expanding and deepening our strategic initiatives, visit: citigroup.com/racialequity
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management.
About the Citi Foundation
The Citi Foundation works to promote economic progress and improve the lives of people in low-income communities around the world. We invest in efforts that increase financial inclusion, catalyze job opportunities for youth, and reimagine approaches to building economically vibrant communities. The Citi Foundation’s “More than Philanthropy” approach deploys the enormous expertise of Citi and its people to fulfill our mission and drive thought leadership and innovation.
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