HSBC's U.S. division is under federal investigation for potentially engaging in discrimination against minority borrowers in six metropolitan areas.
The U.S. Department of Housing and Urban Development is reviewing the bank's lending practices in majority Black and Hispanic neighborhoods within the six regions, HSBC
The geographic areas where HSBC is facing scrutiny include New York, Seattle and four parts of California — Los Angeles, San Francisco, Oakland and Orange County — according to the National Community Reinvestment Coalition, which filed a complaint that prompted the HUD investigation.
After the NCRC filed the complaint, HUD has been investigating whether HSBC violated federal law by engaging in discriminatory lending practices between 2018 and 2021, the bank's filing states.
Alan Pyke, an NCRC spokesperson, said in an email that his organization, which advocates for community groups nationwide on financial and investment issues, filed the complaint earlier this year.
"Lending redlining is a violation of the Fair Housing Act," Pyke said. The NCRC based its complaint on data suggesting "unfair treatment of disenfranchised communities and individuals," he said.
The nonprofit group is focused on working with government agencies to "pursue any remedies they deem appropriate," Pyke said.
A spokesperson for HSBC USA declined to comment. HUD did not respond to a request for comment.
HSBC's U.S. arm has previously faced scrutiny in connection with fair-lending laws.
In 2016, the London-based bank agreed to a $601 million settlement with 49 U.S. states and numerous federal agencies — including HUD, the Department of Justice, the Consumer Financial Protection Bureau and the Federal Reserve — over allegations related to discriminatory mortgage lending and foreclosure practices.
In 2021, Attorney General Merrick Garland
Earlier this year, City National Bank, a unit of Royal Bank of Canada, agreed to pay a $31 million fine in the
In March, Park National Bank agreed to a
In 2022, HSBC sold 10 California branch locations, along with loans and deposits associated with its West Coast consumer banking business, to Cathay General Bancorp.
The sale was part of HSBC's broader pullback in U.S. retail banking, which also included the sale of