Gov. Andrew Cuomo called on federal officials this week to block KeyCorp”™s pending acquisition of First Niagara Financial Group Inc. because it would reduce retail banking competition in the upstate region, limit consumer access to banking services and result in the loss of thousands of bank jobs.
Cuomo in a Feb. 10 letter threatened to take the state”™s case to the courts if federal officials do not block the approximately $4.1 billion deal announced last October by KeyCorp, Key Bank”™s parent company in Cleveland, and First Niagara, headquartered in Buffalo. The deal is expected to close in the third quarter this year.
Bank officials said the combined bank would have approximately $135 billion of assets, making it the thirteenth largest commercial bank based in the U.S. The company would have approximately $99.8 billion in deposits, $83.6 billion in loans and 1,366 branches serving 3 million customers in 15 states.
Cuomo, in a letter addressed to the U.S. Justice Department”™s antitrust division chief and top attorneys at the Federal Reserve Board and Office of the Comptroller of the Currency, said the deal would limit consumer access to upstate banks to “an unacceptably low level.” The consolidation is expected to result in thousands of job cuts at the corporate and branch levels, “with little hope those individuals will find alternative work in the retail banking field due to the oversaturated market conditions,” he wrote.
Applying a mathematical formula used by federal officials to evaluate the anti-competitive effect of a proposed acquisition, the governor said the merger of First Niagara into Key Bank would create a highly concentrated marketplace well above the level that raises antitrust concerns in Washington. Key Bank would end up with approximately one-third of the total bank deposits in the Buffalo area, he said.
By further limiting upstate residents”™ access to financial services and products offered by banks, the deal “will likely push consumers to rely on non-bank alternatives, such as payday loans and check-cashing, which come with higher consumer transaction costs,” Cuomo said.
If the banks”™ acquisition application is not blocked, the state “will be forced to consider legal redress with the courts to protect the rights of New York”™s upstate residents,” Cuomo wrote.
In the metropolitan area, First Niagara Bank operates branches in Westchester and Rockland counties and Fairfield County, Conn. The company in 2014 relocated its tristate regional headquarters from Nyack to Tarrytown. Key Bank operates branches in Westchester and throughout the Hudson Valley. The company in 2013 relocated its Hudson Valley/Metro New York district headquarters from West Nyack to Tarrytown.
