In this merger-happy era of megabanks, the acquisition of $50 billion Republic National by international megalith HSBC may be just one more occasion for cocktails and cigars for downtown financiers. But a coalition of housing and community development groups say the deal could also be big bad news for New York’s neighborhoods.
When the deal is done, HSBC will be the third largest bank in New York State and one of the monsters of international finance, with assets in excess of $500 billion. But so far, there are no indications that HSBC will step up to the plate with a proportionate number of low-cost loans, grants and mortgages–or even that it plans to continue Republic’s strong history of community investment work.
Bank mergers and acquisitions are regulated under the Community Reinvestment Act, which ensures that banks serve the communities they are based in. But in HSBC’s acquisition application to the Federal Reserve Bank, there were only a few brief mentions of community reinvestment programs.
“HSBC doesn’t have a good track record upstate, and some of the language in their application is very noncommittal,” explained Susan Hayes of the Association of Neighborhood Housing Developers. A Federal Reserve Bank examination in 1995 found that HSBC’s community credit efforts were lackluster, with “very weak application and loan approval activity” in New York City.
Another analysis from the Neighborhood Economic Development Advocacy Project found that only six of the bank’s 1,231 loans in the New York area in 1997 were made in low-income areas.
Furthermore, pointed out Asian Americans for Equality’s Chris Kui, although HSBC is one of the biggest holders of deposits from Asian-Americans in New York, it does virtually no small-business or mortgage lending in Asian neighborhoods. “We’ve tried to work with HSBC, but we never got a response,” said Kui.
In a written statement, Executive Vice President Kathleen Whelehan defended HSBC’s record and its plans, pointing out that both banks have solid Community Reinvestment Act ratings and that HSBC intends to “expand our efforts in the integrated bank.”
Part of the rancor is also directed at the Federal Reserve Bank and the New York State Banking Department. The two have scheduled no public hearings for this deal, unlike the recent Chase-Chemical and Citicorp-Travelers mergers.
This Wednesday, the coalition of concerned New York groups are scheduled to meet with bigwigs from HSBC and Republic. But so far, Wall Street’s pinstripes haven’t taken these complaints too seriously: Since mid-July, when HSBC began trading on the New York Stock Exchange, the price of a share in the bank has stayed strong.