Citi is spending $1.15 billion to help close America's racial wealth gap

The move announced Wednesday is part of the bank's new Action for Racial Equity program, which was developed in the aftermath of the death of George Floyd earlier this year.

Of the total $1.15 billion in funds, Citi will spend $550 million to help more people of color purchase homes and promote affordable housing built by minority developers. About $350 million will be dedicated to procurement opportunities for Black-owned business suppliers.

The program's overall aim is to advance US racial equality and economic mobility by providing communities of color with better access to banking and credit, increase investment in Black-owned businesses, boosting home ownership among Black Americans and promote anti-racist practices in the financial services industry.

Citigroup CEO Michael Corbat says confronting racism and closing the racial wealth gap is critical to creating a fair and inclusive society.

"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," Corbat said in a written statement.

Citi also plans to spend $100 million to increase revenue generated by Minority Depository Institutions -- banks owned or operated by people of color that have a better track record on approving loans for entrepreneurs who are minorities than do mainstream commercial lenders.

An additional $100 million in grants will be provided to local community change agents working to address racial inequality across the country. And another $50 million will provide investing capital to Black entrepreneurs.

The nation's history of housing, employment and finance discrimination has led to growing economic disparities among non-Whites, particularly Black Americans. As a result, the median net worth of White households in the US today is about 10 times the median net worth of Black households, according to a 2016 Federal Reserve survey of consumer finances.

More than 20% of Black Americans live below the poverty line, along with 8% of White Americans. Nearly 10% of Black Americans lack health insurance compared to just 5.4% of White Americans.

The coronavirus pandemic is expected to exacerbate these economic disparities.

Citi researchers have determined that the failure to address racial inequality has cost the United States as much as $16 trillion in lost GDP over the past 20 years, according to a report unveiled Tuesday. If those disparities were closed today, the company's analysis says America would add $5 trillion to its GDP over the next five years.

A Citi spokesperson said the company's latest efforts to address systemic racism were partly inspired by Citi CFO Mark Mason's heartfelt "I Can't Breathe" blog post written on May 29 following the death of George Floyd. Mason is one of the few Black executives working for a major commercial bank. His employer hosted a town hall on racism shortly after Mason's comments were published.

On Wednesday, Mason said the $1.15 billion Citi plans to spend addressing racial inequality is just the beginning.

"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," Mason said in a written statement.