Several community groups said Thursday they won’t yet support BMO Financial Group’s purchase of Bank of the West as talks continue on commitments by the Canadian bank to help underserved communities.
At a public hearing, the groups told regulators they need firm commitments from BMO to ensure the merger does not harm the public. Several speakers slammed BMO for denials of mortgage loans and a relative lack of branches for communities of color.
The merger involves BMO Harris Bank, a Chicago-based subsidiary of Bank of Montreal, looking to expand its U.S. footprint by buying Bank of the West, a San Francisco-based subsidiary of the French bank BNP Paribas.
The $16.3 billion deal was large enough that federal regulators called a hearing to field comments from members of the public.
Since the merger’s
“Accountability is critical. Promises are not enough,” Gonzalez-Brito said.
David Casper, U.S. CEO of BMO Financial, said listening sessions the bank has held with community leaders as part of the merger process have been “invaluable.” The bank is taking what it learned from the sessions to develop a community benefits plan that will “focus on expanding and deepening our partnerships within the community” to bring more capital to underserved populations, Casper said.
“I am confident that the impact for our customers will be to provide greater convenience, more product options, lower costs, and greater competition for the markets we're entering,” Casper said.
He also said the bank has a strong record of growing its presence in communities it enters through acquisitions, pointing to its 2011 acquisition of Milwaukee-based Marshall & Ilsley Corporation. While “many thought we would leave Milwaukee high and dry,” Casper said, the bank invested heavily in the community and is consistently seen as a “top corporate citizen” there.
Several nonprofit groups, business owners and civic leaders spoke in support of the acquisition, saying the two banks have been essential in supporting their operations and helping improve their communities.
But others were critical of BMO, as well as Bank of the West, saying that both banks make fewer mortgage loans to Black and Latino applicants than other banks.
Bethany Sanchez, of the Metropolitan Milwaukee Fair Housing Council, said her group is “immensely grateful” for BMO’s investments in the Milwaukee area but that the bank “must do better” in lending to Black borrowers. Citing federal data, Sanchez said BMO made only 17 mortgage loans to Black borrowers in Milwaukee last year, representing less than 7% of its mortgage loans in Milwaukee, where more than a third of the population is Black.
In Chicago, BMO’s mortgage originations and denials for Black and Latino borrowers are “egregious,” said Anthony Simpkins, president and CEO of Neighborhood Housing Services of Chicago.
“This merger has to dramatically improve that record,” Simpkins said.
And in Indianapolis, BMO has no bank branches in majority-Black neighborhoods and has made significantly fewer mortgages to Black borrowers than its competitors, said Amy Nelson, executive director of the Fair Housing Center of Central Indiana.
In a statement, BMO said it is “committed to bringing progress and economic opportunities to the communities we serve” and pointed to its $5 billion, five-year EMpower initiative to help minority businesses and communities. The program is focused on affordable homeownership, small business credit and community development.
A $1.9 billion lawsuit against Bank of Montreal — which is accused of lying to a judge after a predecessor bank destroyed documents — may go to trial late this year. The legal imbroglio is coming to a head as regulators examine the Canadian banking giant’s proposed acquisition of Bank of the West.
The bank also launched its BMO for Black and Latinx small business program in 2020, which helps entrepreneurs with capital, mentoring and networking.
Adrian Rodriguez, director of policy at the Illinois Hispanic Chamber of Commerce, said the group backs BMO’s acquisition. The bank has long been an “essential partner” and has been critical in helping Hispanic businesses survive the pandemic, according to Rodriguez.
“We’re confident this acquisition will allow BMO to expand its excellent work even further,” Rodriguez said.
The Federal Reserve and Office of the Comptroller of the Currency, which hosted the hearing, are accepting comments on the proposed merger until July 19.
