(Sept. 17, 2021) A new fund designed to help banks serve low-income and minority communities will count Microsoft and Truist Financial Corp. – the sixth largest U.S. bank – as its anchor investors, the FDIC announced this week.
The FDIC established the Mission-Driven Bank Fund (MDBF), it said, to channel private capital and other resources to minority depository institutions (MDIs) and community development financial institutions (CDFIs). “MDIs and CDFIs are banks, savings banks, and savings associations that provide critically needed capital and financial services to minority, lower income, and rural communities,” the FDIC said.
Investments in the fund, the FDIC has said, would assist MDIs and CDFIs to (among other things) raise capital necessary to serve communities; weather economic downturns; attract technical expertise; and acquire and use technology.
Also joining as a “founding investor” in the fund is Discovery, Inc., a U.S. multinational mass media factual television company, according to its own description. The three groups’ investment would total $120 million; more investments are expected, the FDIC said.
The “anchor investors” and founding investors were selected, the agency has said, through a competition to counsel the fund’s investing. Under the rules of the competition, the investors were required to have experience managing investment funds and with prior work with MDIs and CDFIs, as well as a “deep understanding of the communities they serve.”
The MDBF has been in development by FDIC since last November, when the agency announced it was looking for investors in the fund. The agency said then that it would play no role in fund management or individual investment decisions of the fund. However, it noted it would continue to “assess the alignment of the Fund’s on-going operations with its purpose of assisting Mission-Driven Banks.”