Dive Brief:

• Citi will spend $1.15 billion over the next three years on initiatives meant to close the racial wealth gap and promote anti-racist financial practices, the bank said Wednesday.
• The commitment breaks down to $550 million to support homeownership for people of color and affordable housing by nonwhite developers; $350 million in procurement opportunities for Black-owned business suppliers; a $100 million investment in minority depository institutions (MDIs); $50 million in investing capital for Black entrepreneurs; and $100 million in Citi Foundation grants to support community entities focused on racial equity.
• The launch came hours after Wells Fargo CEO Charlie Scharf came under fire for comments he made in June — specifically, that the bank's effort to double Black leadership over the next five years suffered from a "very limited" talent pool. Scharf apologized late Tuesday on Twitter, then again Wednesday in a separate statement.

Dive Insight:

In the months since the police killings of George Floyd, Breonna Taylor and others, banks have put an increased focus on racial equality, with Bank of America, PNC, U.S. Bank and smaller institutions such as Huntington Bank pledging billions of dollars collectively to boost Black homeownership, businesses and Black-owned depository institutions.

"It's not enough to declare support for equity, we have to lead," Jane Fraser, Citi's CEO-in-waiting, and Paco Ybarra, CEO of the bank's institutional clients group, wrote in a blog post. "We can't ignore the role our own industry has played in contributing to racial disparities and we can't forget that the biggest difference we can make comes from the work we do day in and day out."

The statement came a day after the bank published a study estimating race-based inequalities — particularly in regard to wages, education, housing and investment — have cost the U.S. $16 trillion in gross domestic product (GDP). Further, the GDP could get a $5 trillion boost over the next five years if the country were to immediately close those gaps, Citi found.

"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," Citi CFO Mark Mason said in a statement Wednesday. He is the only Black representative among the 80 or so top executives at the nation's six largest banks.

As part of its effort, Citi is expanding a program to remove out-of-network fees at the bank's ATMs for customers of participating minority-owned banks and community development credit unions.

The nation's third-largest bank also said it would develop standards to ensure its software eliminates biases; expand its community lending team to boost mortgage product access; and increase ties with minority-owned broker dealers.

The $50 million Citi is putting toward Black entrepreneurship comes from the bank's Impact Fund, which it established this year to provide capital to private-sector companies that aim to overcome societal and community challenges.

The $100 million the bank is setting aside for MDIs will be split between $50 million in growth capital and $50 million in loan participation opportunities for multifamily rental housing.

"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," outgoing CEO Michael Corbat said in Wednesday's statement. "Citi is committed to leading the way and investing in communities of color to build wealth and strong financial futures."