The New York City Banking Commission voted to limit deposits at Capital One and KeyBank after the banks failed to submit plans, as required, demonstrating their efforts to root out discrimination.
Further, New York City Comptroller Brad Lander, who sits on the three-person commission, also voted against designating three other banks to hold public funds — International Finance Bank, PNC Bank, and Wells Fargo.
“Banks seeking to do business with New York City must demonstrate that they will be responsible managers of public funds and responsible actors in our communities,” Lander said. “Unfortunately, despite several opportunities to do so, five banks failed to comply with the New York City Banking Commission’s designation process – leaving us to conclude that they are not taking meaningful actions to combat discrimination in their operations and are not responsible stewards of public dollars.”
Under the charter of NYC Banking Commission, to comply with designation requirements a bank must file certificates concerning its policies of non-discrimination in hiring, promotion, and delivery of banking services, and for bank closings.
In February, the commission said banks must submit to demonstrate a meaningful commitment to combat discrimination in employment, services, and lending. The commission reviewed those materials, bringing questions and concerns about any deficiencies to the attention of the banks with requests for follow up information. Five banks failed to comply with the designation process and the comptroller voted against allowing them to receive additional deposits this cycle.
Capital One, which held $7.2 million in NYC deposits across 108 accounts, and KeyBank, which held $10 million in city deposits across three accounts, outright refused to submit required policies. The three members of the commission thus voted to freeze new deposits in Capital One and KeyBank for up to two years.
Lander also voted against designating three banks that do not currently hold any city deposits, International Finance Bank, PNC Bank, and Wells Fargo. Lander said they failed to demonstrate they were taking action to prevent discrimination in branch openings and closings, lending decisions, hiring, and other operations.
Overall, 26 banks were certified to receive deposits from New York City agencies for the next two years, with 23 receiving unanimous approval. Capital One and KeyBank will be able to service existing contracts for one year. Deposits at Signature Bank, now owned by Flagstar, will be conditionally extended for an additional year under the new ownership.
This is the first of the NYC Banking Commission’s biennial votes on depository banks since Lander and Mayor Eric Adams took office. The commission instituted additional soundness criteria to evaluate bank financials, including assessing unrealized losses, uninsured deposits, and capitalization ratios of banks seeking to hold funds on behalf of city agencies. All of the applicants passed the soundness review.