Royal Bank of Canada's planned takeover of City National Corp. in Los Angeles moved closer to reality Wednesday when an advocacy group for minority consumers, churches and businesses reversed course, supporting the deal.
The National Diversity Coalition dropped its demand for a Federal Reserve hearing on how the public would benefit from the merger, such as the one the Fed held in February to allow comment on another bank merger, CIT Group's proposed takeover of Pasadena's OneWest Bank.
The National Diversity Coalition, based in Daly City, Calif., had generated 4,200 protest letters to bank regulators. Its reversal makes it the third major advocacy group to endorse Royal Bank's $5.4-billion purchase of City National, sometimes called the “bank to the stars” because of its ties to Hollywood and wealthy people.
Berkeley's Greenlining Institute and the California Reinvestment Coalition in San Francisco have already backed the merger, citing City National’s pledge to devote $11 billion in loans and other support over five years to help low-income neighborhoods and small businesses.
City National Chief Executive Russell Goldsmith issued a statement saying his bank would be a staunch advocate for areas where pawnshops, payday loan outlets and car-title lenders outnumber bank and stockbroker offices.
“We look forward to working with the coalition and all of our community partners to make real progress in the years ahead,” Goldsmith said.
In approving bank mergers, the Fed considers the banks' performance and pledges under the 1977 Community Reinvestment Act. The CRA requires banks to serve low- and moderate-income parts of their metropolitan areas.
Signers of the National Diversity Coalition support letter included Faith Bautista, the head of an advocacy group for Filipino and Vietnamese immigrants, as well as representatives of African Methodist Episcopal and evangelical Latino congregations and leaders of the Los Angeles Latino Chamber of Congress.
The letter, posted on the website of Bautista's National Asian American Coalition, said City National and Royal Bank had offered assurances that the $11 billion in written CRA pledges is “just a part of a larger future-oriented commitment to work with underserved communities.”
The letter said the bank’s commitments included “specific and innovative efforts with faith-based institutions to directly assist underserved communities,” including programs for home ownership, small-dollar lending and youth financial education.
The proposed $3.4-billion takeover of OneWest by New York commercial lender CIT divided the advocacy community and prompted the Fed to hold a public hearing on the matter in February.
The National Diversity Coalition supported that acquisition, praising OneWest’s CRA pledge of $5 billion over four years. But the Greenlining Institute, the California Reinvestment Coalition and the National Community Reinvestment Coalition in Washington continue to protest the deal, saying the commitment pales by comparison with City National’s.
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