Royal Bank of Canada's proposed purchase of City National Corp. in Los Angeles cleared one potential hurdle when an advocacy group for low-income and minority consumers reversed course and said it supported the $5.4-billion deal.
The group, Greenlining Institute in Berkeley, initially joined other advocates in withholding support and seeking a public hearing by the Federal Reserve that might have delayed the deal for City National, the parent of City National Bank.
But Greenlining advised the Fed on Tuesday that it supported the deal "after ongoing negotiations with City National Bank to ensure that California's low-income consumers and businesses of color benefit from the proposed merger."
Michael Cahill, City National's general counsel, said Wednesday that the bank welcomed Greenlining's support, which he called "very significant."
He noted that another advocacy group, the California Reinvestment Coalition in San Francisco, also supports the deal.
But the banks still face opposition from the National Diversity Coalition, an amalgam of community, ethnic and minority groups in Daly City, Calif.
"We haven't had a conversation [with the NDC] in the last few days," Cahill said, but he noted that City National remained "open to more dialogue, more discussion with them."
In approving bank mergers, the Federal Reserve takes into account the banks' performance and pledges under the 1977 Community Reinvestment Act, which requires banks to serve poorer customers in their metropolitan areas.
The advocacy groups hope to ensure that the merger's benefits include added service and investment for lower-income and minority consumers and businesses in areas served by City National, a bank sometimes dubbed the "bank to the stars" because of its deep Hollywood ties.
As part of the Royal Bank of Canada merger, City National has committed $11 billion over five years to help poor neighborhoods and small businesses.
But it took additional talks about specific efforts sought by Greenlining that helped City National and Greenlining come to agreement, Cahill said.
For instance, City National agreed to Greenlining's request that the bank "focus more of its lending on transit-oriented development projects, projects around the rail and Metro hubs," including loans for small businesses near those projects, he said.
City National's shareholders are scheduled vote on the merger May 27.