Tuesday, 20 October 2020

Citi launches more than $1 billion in strategic initiatives to help close the racial wealth gap

Citi and the Citi Foundation announced more than $1 billion in strategic initiatives to help close the racial wealth gap and increase economic mobility in the United States. 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.

To support these goals, Citi core businesses as well as the Citi Foundation are committing the following resources over the next three years:

“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,” said Citi CEO Michael Corbat. “We are bringing together all the capabilities of our institution – our people, our lines of business, our balance sheet, and our philanthropy – like never before to combat the impact of racism in our economy. This is a moment to stand up and be counted, and Citi is committed to leading the way and investing in communities of color to build wealth and strong financial futures.”

According to the recently published Citi GPS report “Closing the Racial Inequality Gaps,” if the U.S. had closed key racial gaps for Black Americans in wages, housing, education and investment 20 years ago, $16 trillion could have been added to the U.S. economy. If these gaps are closed today, $5 trillion could be added to U.S. GDP over the next five years.

“We are in the midst of a national reckoning on race and words are not enough. We need awareness, education, and action that drive results,” said Mark Mason, Citi’s CFO and one of the industry’s most senior Black executives. “The commitments we are announcing today are just the starting point. By harnessing the central role Citi plays in local economies and the financial lives of Americans, we are determined to help close the racial wealth gap and help build an anti-racist economy and society.”

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

Why it matters:

Many communities of color lack access to traditional banking services that are the foundation of financial stability and thriving communities. Economic security is also hampered by insufficient access to credit, which makes it hard to qualify for affordable mortgages and small business loans.

What Citi will do:

GOAL #2: INVEST IN BLACK ENTREPRENEURSHIP

Why it matters:

Black-owned businesses have long faced obstacles in obtaining loans. They are the most likely to apply for bank financing, but get turned down at twice the rate as white business owners. This financing gap is especially pronounced in the start-up world, where studies show that Black entrepreneurs receive only 1% of venture capital funding.

What Citi will do:

GOAL #3: INVEST IN AFFORDABLE HOUSING AND PROMOTE THE GROWTH OF BLACK HOMEOWNERSHIP

Why it matters:

Homeownership is a key way to build wealth and equity, and safe, affordable housing is an important platform for financial stability. However, Black homeownership is at its lowest level since the 1960s. In addition, rental housing in many urban areas across the country is scarce and too expensive. Compounding this crisis is the near-absence of minority-owned real estate developers in the affordable housing industry.

What Citi will do:

GOAL #4: STRENGTHEN CITI’S POLICIES AND PRACTICES IN ORDER TO BECOME AN ANTI-RACIST INSTITUTION

Why it matters:

Advancing racial equity requires a more intentional focus on the challenges faced by communities of color and a commitment to becoming an anti-racist institution. Citi is taking a hard look at its own policies and practices to actively identify potential bias to help level the playing field for communities of color.

What Citi will do:

In addition to Citi’s business commitments, the Citi Foundation is making a new $5 million grant to Living Cities to provide U.S. mayors with access to technical expertise, training, and seed capital for pilot initiatives that address racial wealth and income gaps. The Citi Foundation also is expanding employability and entrepreneurship efforts serving Black youth as part of a new three-year $100 million investment in its successful Pathways to Progress initiative.

“Citi is going beyond talking about discrimination by implementing concrete strategies to address longstanding inequities in communities of color,” said Kristen Clarke, President & Executive Director of the Lawyers’ Committee for Civil Rights Under Law. “Citi is charting a course that we hope will be replicated throughout the sector. We look forward to continuing our partnership.”

Over the past decade, Citi and the Citi Foundation have invested nearly $100 million in programs and partnerships aimed at closing the racial wealth gap. In 2020, with renewed attention on racial equity in the U.S. and around the globe, Citi donated an additional $10 million to Black-led organizations fighting for racial justice. Citi is also working to increase representation of Black employees in the U.S., especially in senior roles, and encourage a stronger awareness of the legacy of racism and discrimination in the workforce and the industry.

Certain Action for Racial Equity commitments, including portions of Citi’s investments in minority developers and in Minority Depository Institutions, will require approval from the Office of the Comptroller of the Currency.

 

Re-disseminated by The Asian Banker

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