HSBC’s $14 billion (£9 billion) acquisition of Household International is under fire from New York activists who claim that the British banking group discriminates against black and Hispanic customers and that the deal will breach US banking laws.

Inner City Press (ICP), a civil rights group based in the Bronx, wants regulators to block what would be HSBC’s biggest acquisition on the ground that it would break rules requiring institutions to fairly serve the communities in which they operate.

The organisation, which has taken on financial titans such as Citigroup and Lehman Brothers, said: “To combine these two companies, as proposed, would create a conglomerate blatantly violating the US fair lending laws. HSBC’s proposal would adversely impact low and moderate-income communities in the United States and abroad.”

Matthew Lee, executive director of ICP, claims HSBC in New York denied applications for mortgage refinance loans to African Americans 2.7 times more frequently than to white customers. He also says that the UK bank denied applications from Hispanic customers 2.3 times more than for white customers. The average rate of disparity, the complaint says, is 1.66 for African Americans and 1.57 for Hispanics.

The complaint claims that HSBC has a record of failing to meet industry standards on ethnic diversity; and that Household targets the same groups with high interest loans.

“In essence, HSBC, with its normal interest-rate loans, under-serves people of colour, while Household targets these same people with high-cost loans,” Mr Lee said. “Household is a predatory lender. Not only would HSBC be acquiring a predatory lender . . . it would become, and export, a predatory lender.”

The UK bank said: “HSBC pursued the acquisition of Household International after Household had entered into its comprehensive agreement with a group of state attorneys-general and regulators to implement new consumer protection measures and make Household a groundbreaking model for consumer lending.” HSBC would rigorously follow US rules and seek to reduce the litigation against Household International.

The Federal Reserve would not comment on ICP’s objections to the deal but Britain’s Financial Services Authority said it would pass on any legitimate concerns raised in the complaint to the Takeover Panel.