KeyCorp’s purchase of First Niagara Financial Group announced Friday – a $4.1 billion deal with impact across the state – will have its most painful consequences in Buffalo.
The deal represents a major achievement for the two financial rivals and their shareholders, but it’s going to trigger a long period of uncertainty and trepidation for more than 3,300 Western New York employees of both banks because of significant local overlap.
Branch closings, layoffs, canceled supplier contracts, and possibly a lessening of community investment are feared, plus some loss of prestige for Buffalo – despite pledges by the banks’ top executives to tread lightly and be sensitive to concerns.
“We will treat people fairly and with dignity,” Beth Mooney, chairman and CEO of KeyCorp, said in an interview. “There will probably be some overlaps and reductions, but that is not the primary focus. The primary focus is how we can combine our companies to be successful.”
The merger brings together the second- and third-largest banks in Buffalo in a deal that reshapes the Western New York banking landscape and boosts KeyBank to No. 13 in the nation.
The combined company, under the KeyCorp name and management, will have $135 billion in assets. It will serve 3 million customers across the Northeast, Mid-Atlantic, Midwest and Pacific Northwest, with branches in 15 states from Maine to Alaska.
The deal creates a powerful No. 2 challenger to M&T Bank Corp., the market leader in Western New York and a major player across all of upstate New York. It enhances KeyCorp’s presence in all major upstate markets from Buffalo to Albany, and forms the market leader along the I-90 corridor from Toledo to Albany, while adding new markets in Pennsylvania, Connecticut and Massachusetts.
And it enhances Key’s lending and deposit businesses while giving it the additional scale needed to compete with other large banks, including M&T, which itself will grow to nearly $140 billion in assets on Sunday when it completes its long-delayed purchase of Hudson City Bancorp in New Jersey. Key will now have $99.8 billion in deposits, $83.6 billion in loans and 1,366 branches.
“The strategic opportunity to combine with First Niagara will create a high-performing regional bank,” Mooney said. “Key’s franchise will be forever stronger and we look forward to delivering results and doing so in a way that makes this more rewarding for our shareholders.”
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