Bank of America Corp. on Tuesday announced plans to invest $500 million in inner-city businesses as part of President Clinton's push to fight poverty.
At a ceremony with the President in East St. Louis, Ill., Catherine P. Bessant, president of the bank's community development banking group, unveiled the Bank of America Catalyst Fund.
The equity fund is to provide money to help inner-city small businesses get started or expand operations. In return, the fund would get ownership stakes.
Of the total investment, Bank of America pledged $100 million to existing community development financial institutions that already work with small businesses in inner-city and other markets.
President Clinton is criss-crossing the country on a four-day tour of economically underserved communities to bring attention to the administration's New Markets Initiative.
That effort is designed to encourage investing in these areas rather than in emerging foreign markets.
Other banking companies involved are Bank One Corp., Deutsche Bank, and First Union Corp.
First Union has pledged at least $5 million of small-business equity investments and loans this year and next year in the Appalachian region, which covers 20% of the banking company's geographic spread, a spokeswoman said.
"There's a huge role for the private sector because the private sector has a huge amount of capital available," said Vickie Tassan, a Washington- based senior vice president in Bank of America's community development banking group.
The Catalyst Fund was created as an alternative for companies having trouble getting financing, Ms. Tassan said. Its first investments will probably be made in a few months, she added.
Tuesday's announcement is part of a $350 billion commitment to community development announced last summer when NationsBank Corp. and Bank of America merged to create the nation's largest bank, with $614 billion of assets. The $500 million fund is the largest single commitment announced to date by the Charlotte, N.C.-based bank.
"We're looking for investment opportunities where there is a big impact in a local community," Ms. Tassan said. "This would really set them (businesses) afire.
"We have other programs and projects that would cover lower-end, smaller deals," she said.