Dive Brief:
- BMO Harris pledged Monday to commit $40 billion to underserved communities across the bank's expanded footprint in the U.S. in a move meant to assuage regulators and opponents of its $16.3 billion proposed acquisition of Bank of the West from BNP Paribas.
- The five-year effort aims to boost homeownership and small-businesses growth in low-to-moderate income (LMI) neighborhoods and communities of color.
- Roughly $16 billion of the pledge targets California, where Bank of the West is based.
Dive Insight:
BMO developed the plan with input from more than 85 community groups through listening sessions facilitated by the National Community Reinvestment Coalition (NCRC) and the California Reinvestment Coalition (CRC). A number of community advocates expressed their concerns over the deal during a July public hearing held by the Federal Reserve and the Office of the Comptroller of the Currency (OCC). Many reservations centered on BMO’s track record of mortgage lending to nonwhite borrowers and the deal’s potential impact in California.
"We have a duty to continue addressing the barriers that disproportionately affect people of color and remain committed to creating more opportunities that achieve progress for all," David Casper, BMO’s U.S. CEO, said Monday in a statement.
The plan comes, too, as the Bank of the West acquisition’s one-year deadline approaches in late December.
Monday’s announcement builds off BMO’s EMpower effort, a $5 billion initiative launched in 2020 and aimed at a more inclusive economic recovery. More than half of the $40 billion tied to Monday’s plan is meant to benefit communities of color and combat the racial wealth gap.
BMO will designate $7.5 billion of the community benefits plan to home lending, with around 75% aimed at communities of color. Around $5.1 billion of that total targets California.
The bank pledged $16.5 billion toward small-business lending, including $5.3 billion targeting California. Roughly 60% is aimed at nonwhite communities, BMO said. The bank is also putting $200 million toward expanding its small-business programs that support women-, Black- and Latinx-owned businesses, as well as a new program for Native American-owned businesses.
About $17.5 billion will go toward community development loans, investments and other support for underserved communities, the bank said — including $6.1 billion in California.
In a statement, NCRC CEO Jesse Van Tol called the community benefits plan “a substantial move in the right direction.”
"Mergers must provide a clear public benefit,” CRC CEO Paulina Gonzalez-Brito said. “This agreement accomplishes this through increased investment and services in LMI communities and communities of color and increased lending to BIPOC-owned small businesses.”
