WASHINGTON – KeyCorp has agreed to cut no more than 250 banking jobs statewide when it completes its acquisition of First Niagara Financial Group and, in fact, add at least 500 new jobs in the coming years, Sen. Charles E. Schumer and Rep. Brian Higgins said Sunday after negotiating a deal that also calls for Key to establish a Northeast regional headquarters that could bring most of those new jobs to Buffalo.
The surprise agreement, described to The Buffalo News on Sunday, ensures that employees of the two banks’ branches will remain employed after the merger – although upward of 250 management employees could lose their jobs as the two banks combine their operations. As for the new jobs, they will largely be in three business lines that Key committed to base at the new regional headquarters in Buffalo: commercial insurance, auto lending and mortgage banking.
The deal follows months of worry among local public officials that the proposed merger could result in the loss of upward of 2,000 jobs, most of them in Western New York.
Through those months, Schumer and Higgins negotiated privately with KeyCorp CEO Beth E. Mooney to try to save the jobs that could be lost through the merger, and the two lawmakers said Sunday that they were happy with the agreement they reached.
“This result was much better than we ever anticipated,” said Schumer, D-N.Y., citing Key’s agreement to set up a regional headquarters in Buffalo.
Higgins, a Buffalo Democrat, agreed, saying: “With Chuck Schumer in the lead, we used every leverage point we had to fight for every job and to locate the KeyBank Northeast headquarters in Buffalo.”
The agreement, which was finalized over the weekend, caps the number of layoffs that can occur in New York State at the combined bank.
“As a result of Key’s commitment to add new jobs and transition existing employees to those jobs, KeyBank will do everything it can to minimize the need to lay off any employees,” said an explanation of the deal issued by Schumer’s office. “However, there may be some situations where KeyBank eliminates a position and there is no future comparable position available to that employee. KeyBank has agreed to do everything it can to minimize those situations and has committed that the number of employees that may need to be laid off as a result of the transition will not exceed 250.”
Also under the agreement, all KeyCorp and First Niagara branch employees – full time and part time – will be offered a comparable full-time position with the bank in the same region after the acquisition is completed.
Federal regulators are expected to require Key to sell some branches to maintain banking competition in the Buffalo area, but as part of the agreement, Key committed to sell branches to an institution that will keep them operating and retain the employees.
Perhaps more significant under the deal in the long run, though, will be Key’s increased commitment to Buffalo.
Thanks to the creation of a regional headquarters in Buffalo and the move of three business lines there, Buffalo should benefit the most from Key’s agreement to increase employment in New York State, the lawmakers said.
Key agreed to add at least 500 to 600 jobs in upstate New York through 2018, and is likely to add 300 to 400 more jobs in 2019 and 2020.
The agreement calls for Key to have at least the same number of employees in upstate New York in 2021 as the two banks combined have today – 6,117 – but Schumer and Higgins said they expect that the bank will employ more than that number.
“KeyBank has committed to the principle that all of these workforce levels are floors, rather than ceilings, and hopes to grow beyond these employment levels in the years to come,” the outline of the agreement said.
The deal also includes a provision that Higgins insisted on: one that calls on Key to take the lead in addressing the 800 “zombie” properties in Western New York. In particular, Key committed to respond quickly to legitimate offers to acquire blighted or vacant housing that it acquired through foreclosure. Key also agreed to maintain all the vacant or blighted properties that it owns.
The detailed and highly unusual agreement was the product of two in-person meetings that Schumer had with the KeyCorp CEO, one of which Higgins attended, in the senator’s Washington office. The lawmakers said they followed up those meetings with several phone calls with the CEO.
“I don’t think enough can be said about Chuck Schumer’s leadership on this issue,” Higgins said. “A lot can happen when you use the trappings of your office to get face-to-face with a CEO. Chuck was very effective on behalf of Western New York.”
The KeyCorp-First Niagara merger requires antitrust approval from the federal government, and Schumer threatened to oppose the deal if the bank didn’t agree to minimize its negative impact on jobs.
“They understood that if Higgins and Schumer oppose this, it might not go through,” Schumer said.
Schumer is in line to become the Senate’s Democratic leader in January and could be majority leader if the party regains control of the Senate. Asked if that fact helped him during the negotiations, Schumer said, “I used whatever clout I have.”
Both lawmakers said that the negotiations were difficult but that Key’s commitment to be a good corporate citizen in upstate New York helped bring the deal together.
A KeyCorp spokesman confirmed that Key had reached an understanding with Schumer and Higgins as outlined by their announcement. The spokesman said the provisions of the understanding are consistent with Key’s plans for the merger with First Niagara.
Key had an ongoing dialogue with the lawmakers and hopes to continue to work with them productively in the future, the spokesman added.
The lawmakers, meanwhile, said they will keep a close eye on how the agreement is implemented.
“In the months and years to come, I look forward to making sure the terms of this plan, which is designed to save the maximum number of existing jobs, and create new ones, too, is lived up to,” Schumer said. “I also plan to work closely with KeyBank and community leaders to continue to grow the regional economy and add even more jobs at KeyBank’s Buffalo headquarters.”