Business & Money

NYC Banking Commission votes to freeze city’s deposits in Capital One, KeyBank

May 25, 2023

Andrii Yalanskyi/iStock via Getty Images

The New York City Banking Commission on Thursday voted unanimously to freeze the city’s deposits in Capital One (NYSE:COF) and KeyBank (NYSE:KEY) for up to two years as they failed to submit plans showing efforts to root out discrimination.

Capital One (COF) and KeyBank (KEY) will be able to service existing contracts for one year.

The vote followed the first-ever banking commission public hearing. According to the commission’s rules, banks seeking to hold public funds must file certificates on its non-discrimination policies and show “meaningful commitment” to combat discrimination.

The commission said Capital One (COF), which held $7.2M in NYC’s deposits at April-end, and KeyBank (KEY), which held $10M in NYC’s deposits at April-end, refused to submit required policies.

“Capital One (COF) prohibits discrimination and harassment,” a company spokesperson told Seeking Alpha. “We are happy to share publicly available data with the commission. Our 2023 submission is consistent with what we submitted to New York City in previous years.”

“KeyBank (KEY) does not discriminate in any of its operations,” a spokesperson for the bank told Seeking Alpha. “We provided the required certifications and information to the commission. We believe this is a misunderstanding and we look forward to clarifying this issue.”

NYC Comptroller Brad Lander also voted against designating three other banks to hold public funds as they failed to show they were taking action to prevent discrimination. These are International Finance Bank, PNC Bank (PNC), and Wells Fargo (WFC).

All applicants seeking the designation passed the commission’s soundness review. Twenty-six banks were certified to receive NYC’s deposits for the next two years, of which 23 received unanimous votes.

Deposits at failed Signature Bank (OTC:SBNY), now owned by Flagstar Bank, will be conditionally extended for an additional year under the new ownership.