Citigroup has been dropped from a group of banks expected to handle Texas’ largest-ever municipal-bond transaction after the bank was deemed discriminatory against the firearm industry.
The Texas Natural Gas Securitization Finance Corp. board dropped Citigroup from taking part in an expected $3.4 billion deal, according to Lee Deviney, executive director of the Texas Public Finance Authority, who is overseeing the borrowing, according to Bloomberg.
Attorney General Ken Paxton’s office said they would not “approve any public security issued on or after today’s date in which Citigroup purchases or underwrites the public security” in a January 18 letter.
“Citi’s designation as an SB-19 discriminator has the effect of halting its ability to underwrite most municipal bond offerings in Texas,” the Attorney General’s office told Reuters.
Texas SB-19 states that a governmental entity cannot contract with a company unless the company verifies in the contract that it “does not have a practice, policy, guidance, or directive that discriminates against a firearm entity or firearm trade association” and that it will not discriminate against such bodies.
The $3.4 billion bond will raise money to bail out natural gas utilities that suffered losses during the historic 2021 Texas Freeze. The capital raise is designed to “spread out the sky-high energy costs over decades to avoid burdening residents with abnormally high energy bills,” according to Bloomberg.
“Citi does not discriminate against the firearms sector and believe we are in compliance with Texas law,” a Citigroup spokesperson told Reuters.
The spokesperson said Citi would stay engaged with the attorney general’s office to review options.
Citigroup was the second bank to be removed from the bond offering after UBS Group AG was also kicked off the list of banks involved in the deal in October because Texas listed them among banks considered to “boycott” the oil industry, Bloomberg said.
In 2018, Citigroup’s anti-gun stance took shape, instituting a “U.S. Commercial Firearms Policy” after the Parkland school shooting in Florida. Citigroup told retailers that it did not want their business if they sold guns to people under 21, according to the Wall Street Journal.
“It is not centered on an ideological mission to rid the world of firearms. That is not what we seek. There are millions of Americans who use firearms for recreational and other legitimate purposes, and we respect their Constitutional right to do so,” the bank said in a statement about the policy in 2018.
“But we want to do our part as a company to prevent firearms from getting into the wrong hands. So our new policy centers around current firearms sales best practices that will guide those we do business with as a firm,” the statement continued.