Justice Department Requires Divestitures in Keycorp’s Acquisition of First Niagara Financial Group Inc.
Eighteen Branches in Greater Buffalo, New York, to Be Divested
The Department of Justice announced today that KeyCorp and First Niagara Financial Group Inc. have agreed to sell 18 of First Niagara’s branches in and around Buffalo, New York, with approximately $1.7 billion in deposits, to resolve antitrust concerns that arose from KeyCorp’s planned acquisition of First Niagara. The department said that the divestitures will ensure that the transaction does not harm competition for retail banking services in the Greater Buffalo area. As a result of the acquisition, KeyCorp will become the 13th largest bank in the nation, with about $135 billion in assets, $99.8 billion in deposits and more than 1000 branches across 15 states.
Under their agreement with the department, the companies have agreed to divest 13 branches in Erie County and 5 branches in Niagara County, New York. The divested assets will include the commercial loans associated with the divested branches. The companies have also agreed to suspend existing, and not to enter into new, non-compete agreements with their small business and middle market relationship managers and their retail regional and branch managers, in the state of New York, for a period of 180 days following the consummation of their merger. Further, the companies have agreed to sell or lease branches closed within two years of the consummation of the merger in the state of New York to other depository institutions.
“Americans value the convenience of retail bank branches,” said Principal Deputy Assistant Attorney General Renata Hesse of the Justice Department’s Antitrust Division. “Today’s agreement will ensure that customers in Buffalo and other New York markets will continue to enjoy the benefits of competition among banks with retail branch networks.”
The proposed merger is subject to the final approval of the Board of Governors of the Federal Reserve System. The department said that it will advise the Federal Reserve Board that it will not challenge the merger provided that: the parties divest the branch offices, associated loans and deposits and the entire customer relationships associated with the divestiture branches; the parties commit to the Federal Reserve Board that they will comply with the agreement with the department; and the parties’ commitments to the department are included as a condition to any order the Federal Reserve Board enters allowing the transaction.
KeyCorp is a financial holding company headquartered in Cleveland with approximately $95 billion in total assets. KeyCorp, through its subsidiary KeyBank N.A., operates 972 branches in 12 states: Ohio, New York, Washington, Oregon, Indiana, Colorado, Utah, Maine, Florida, Michigan, Alaska and Vermont. With two major business segments, Key Community Bank and Key Corporate Bank, KeyBank serves individuals, small and mid-sized businesses and corporate clients.
First Niagara Financial Group Inc. is a financial holding company headquartered in Buffalo with approximately $39 billion in total assets. Providing retail and commercial banking services, First Niagara, through its subsidiary First Niagara Bank N.A., operates 394 branches in New York, Pennsylvania, Connecticut and Massachusetts. First Niagara focuses on traditional banking products that include loans, deposits and insurance.
A list of the branches to be divested is attached.