On Wednesday, New York Gov. Andrew Cuomo wrote a letter to the federal officials requesting to hold a deal that merges First Niagara and KeyCorp. The governor said that the acquisition plan of First Niagara by KeyCorp would hinder retail banking competition.
Biz Journal reported that the merging of First Niagara, which is based in Buffalo, and KeyCorp is said to be one of the largest US bank mergers of recent years. After KeyCorp announced its proposal to acquire First Niagara for $4.1 billion of cash and stock, Governor Cuomo, then reacted and sent a letter to the federal government.
Governor Cuomo said that the acquisition 'would have a devastating impact on consumers and upstate New York'. "This proposal would reduce retail banking competition, limit consumer access and convenience, and ultimately eliminate jobs throughout the region," Cuomo said.
The merging of KeyCorp and First Niagara would create the nation's 13th-largest commercial bank. KeyCorp will then have an estimated $135 billion of assets, $99.8 billion of deposits and 1,366 branches in the US. Reuters reported that financial experts projected its annual savings, which is about $400 million.
Governor Cuomo sent a letter to a general counsel for the Board of the Federal Reserve System, Scott Alvarez back on February 10. North Country Now reported that Cuomo also sent a letter to the Chief of the US Department of Justice's Antitrust Division, Jeffrey Martino, and Senior Deputy Comptroller of the Office of the Comptroller of the Currency, Amy Friend.
The letter suggests that the merging of KeyCorp and First Niagara should be denied on antitrust grounds. He also wrote that the merging would most probably force many people to rely on costly alternatives, which includes check-cashing providers and payday lenders.
Meanwhile, KeyCorp released a statement saying it has a 'strong commitment' to the communities of New York. KeyCorp is looking forward to discussing the details and address the concerns of Cuomo and his staff. However, First Niagara made no comment regarding the issue.
