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Citi’s Ray McGuire Rebukes Companies ‘Checking the Box’ on Diversity

Jenny Surane

(Bloomberg) -- Citigroup Inc. Vice Chairman Ray McGuire warned companies to avoid simply “checking the box” on diversity initiatives without making sure those efforts produced real change.

In one example, McGuire said many companies have allowed minority-owned broker-dealers to help with their bond or equity issuance. But those corporations then often only allocate 20 basis points of fees to such firms, he said.

“Certainly it checks the box but is anything there material? No,” McGuire said during a virtual Economic Club of New York meeting on Tuesday. “It’s a feel-good check-the-box. But it’s certainly not advancing any of this.”

In contrast, McGuire pointed to Bill Ackman’s efforts to raise as much as $6.45 billion in an initial public offering for his blank-check company. For the deal, Ackman hired CastleOak Securities, Loop Capital Markets, Ramirez & Co., Siebert Williams Shank, Academy Securities, C.L. King & Associates and Roberts & Ryan as co-managers and co-lead managers.

All of those firms are owned or led by minorities, women or veterans.

“He had the courage and conviction to include minority firms as co-managers with 365 basis points of fees -- 20% of fees -- to that group,” McGuire said. McGuire’s Citigroup will act as joint bookrunner with UBS Group AG and Jefferies Financial Group Inc.

Citigroup itself has sought to use more-diverse firms for its own corporate issuance. The bank hired women-owned firms as lead managers for its $4 billion bond issuance in March.

McGuire was previously Citigroup’s global head of corporate and investment banking, a position he held for over a decade. The 63-year-old executive is also a board member for Citi Foundation, the philanthropy arm focused on improving the lives of people in low-income communities.

During the event, McGuire discussed ideas on how to reform education systems in low-income and minority communities as well as the need for better health care in such areas. Asked if he’d considering running for mayor of New York -- an idea he’s reportedly flirted with in the past -- he was evasive.

“Service is an important and necessary part of my journey and it should be an important and necessary part of all our journeys,” McGuire said, noting he was planning to vote in Tuesday’s elections in New York, which don’t include the race for mayor. “Wherever I think I can be best and most highly effective, that’s the path that I will follow.”

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