J.P. Morgan Chase is launching an investment product specifically to support Black-owned banks, Bloomberg reported. The financial services firm also made equity investments in four minority banks as part of a mission to reduce the racial wealth gap.
“We’re creating another revenue stream for them,” Brian Lamb, global head of Diversity and Inclusion at J.P. Morgan Chase, told Bloomberg, referring to minority-owned financial institutions (FIs). He added that the money will help “drive prosperity into the very communities that they’re looking to serve.”
The product will be a special class of shares offered across J.P. Morgan’s money market funds. It will be distributed by The Harbor Bank of Maryland, Liberty Bank and Trust, M&F Bank and Unity National Bank, according to the report. J.P. Morgan said it will share assets and fees with distributing banks and make an endowment of 12.5 percent of the annual revenue collected in management fees.
The country’s biggest banks have been under escalating pressure to help fix race-based economic gaps, according to Bloomberg. The death of George Floyd by police and the ensuing protests made Black-owned banks part of the conversation. Black-owned banks now total just 18, down from 48 over the past 20 years.
J.P. Morgan told Bloomberg that Google has said it would invest $500 million in the special money market share class as part of its own pledge to enhance racial equity.
Earlier this month, Wells Fargo said it put equity investments into six Black-owned banks. The bank announced in March that it was planning to give Black-owned banks as much as $50 million. Kleber Santos, head of Diverse Segments, Representation & Inclusion at Wells Fargo, said the pandemic has shown the depth of the existing inequalities and racial divides.