Morgan Stanley pledges $15B help low-income communities

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Morgan Stanley will commit $15 billion over the next four years in the form of lending, investments and other financial support for low-income communities, as part of its deal to buy E-Trade Financial Services.

Morgan Stanley's plan includes financial support for community development financial institutions and other nonprofit organizations, as well as a pledge to bolster its own internal diversity efforts. Morgan Stanley developed the plan with input from the National Community Reinvestment Coalition, the NCRC said Thursday.

“This is a big commitment for Morgan Stanley to increase the value of the firm’s lending and investments in lower-income communities and communities of color that have long been neglected by the nation’s banks,” NCRC Chief Executive Jesse Van Tol said in a press release.

Such large-dollar community benefits plans have long been a feature of mergers and acquisitions, although nationwide protests over racial injustice and the COVID-19 pandemic have drawn greater attention to racial and economic inequality this year. For instance, Huntington Bancshares in Columbus, Ohio, recently announced a similar, $20 billion pledge building off a community benefits plan it made in 2016 when it acquired FirstMerit.

Morgan Stanley announced in late February that it would buy E-Trade, a discount brokerage firm, for $13 billion. That deal, which is expected to close in the fourth quarter, will give Morgan Stanley a stronger foothold in retail banking.

Van Tol said the bulk of the $15 billion will go toward lending and investments in community development projects, like affordable housing. He said that currently, Morgan Stanley and E-Trade make around $2 billion a year in lending and investments in lower-income communities and that the plan outlined on Thursday represents about a 43% increase over that.

The investment bank’s community benefits plan includes $50 million in grants to CDFIs, loan funds and community development groups providing counseling and capital during the pandemic. It will also make a $5 million grant to the NCRC, which the nonprofit will then pass on to NCRC members that are focused on racial equity and don’t currently receive support from Morgan Stanley.

Additionally, Morgan Stanley will make up to $1 billion in bond offerings to CDFIs with no fees and will support uniform standards for supplier diversity.

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M&A CDFIs CRA Morgan Stanley E-Trade Financial
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