Cuomo Says Bank Merger Deal Would Have ‘Devastating’ Impact

Real Estate In-Depth | February 2016

ALBANY—New York Gov. Andrew Cuomo in a letter sent to federal banking regulators earlier this month, voiced his strong opposition to the pending $4.1-billion acquisition of First Niagara Financial Group Inc. by Cleveland-based KeyCorp.

The governor in his Feb. 10th letter to senior officials with the Federal Reserve System, the Office of the Comptroller of the Currency and the US Department of Justice’s Antitrust Division, charged that if the merger were to be approved it “will have a devastating impact on the retail banking industry and consumer access in Upstate New York.”

The governor told the regulators that the state is urging them to block the proposed acquisition. He charged that the consolidation of First Niagara into KeyBank, a division of KeyCorp, would result in “thousands of lost jobs at the corporate and branch levels…”

The governor also stated that the merger would limit the already few conventional banking options for Upstate New York residents, particularly in the Buffalo region where he charged in the letter that “tens of thousands of Buffalo area residents do not have access to reliable bank deposit services. Eliminating branches will only exacerbate the existing problem.”

The governor ended his letter by stating that if the acquisition was not blocked, “we will be forced to consider legal redress with the courts to protect the rights of New York’s Upstate residents.”

At the time of the deal that was announced last October, Buffalo, NY-based First Niagara had $39 billion in assets and $29 billion in deposits and 394 banking offices in New York, Pennsylvania, Connecticut and Massachusetts. With approximately $135 billion of assets, the combined bank will be the 13th largest commercial bank headquartered in the U.S.

KeyBank issued a statement to in response to Gov. Cuomo’s objections to the merger deal. “KeyBank was founded in upstate New York in 1825 and for nearly two centuries has shown a strong commitment to the communities of New York. In fact, New York currently represents more than 20% of our employees and business,” KeyBank stated. “At KeyBank, our purpose is to help clients and communities thrive and we are known as a responsible bank and citizen in the communities we serve. We wholeheartedly believe by further investing in New York we will increase our ability to better serve the people, businesses and communities of this state. We look forward to working with Gov. Cuomo and his staff to address their concerns and share our commitments.”