KeyCorp buying First Niagara, will become nation's 13th-largest bank

Plain Dealer file photo

CLEVELAND, Oh -- KeyCorp this morning said it's buying First Niagra of Buffalo, a deal that will increase Key's size by 40 percent and make it the 13th largest bank in the United States.

Cleveland-based Key will pay $4.1 billion in cash and stock for First Niagara, which has $39 billion in assets and $29 billion in deposits and 394 branches in New York, Pennsylvania, Connecticut and Massachusetts.  

After the purchase, Key will have about $135 billion in assets and nearly 1,400 branches. It currently has about $95 billion in assets and nearly 1,000 branches.

The deal will give Key a larger presence in New York and expand in Pennsylvania, Massachusetts and Connecticut.  

Largest U.S. banks, by assets

This shows how U.S.-based banks will stack up in size after the Key/First Niagara deal.

1. JPMorgan Chase

2. Bank of America

3. Wells Fargo

4. Citibank

5. U.S. Bank

6. PNC

7. Mellon/ Bank of New York

8. State Street

9. Capital One

10. SunTrust

11. BB&T

12. Fifth Third

13. KeyCorp

14. Goldman Sachs

15. Morgan Stanley

16. Regions Bank

17. Union Bank

18. Northern Trust

19. Citizens

20. Ally

"Key and First Niagara are a powerful combination, driven by a shared commitment to the clients and to the communities we serve," said KeyCorp Chairman and CEO Beth Mooney said in a statement.

"This transformational opportunity will bring compelling and complementary capabilities to our shared 3 million clients."

This represents the biggest purchase by a local bank in years, as banks nationwide have shied away from deals since the financial crisis of 2008, primarily because of uncertainty about new regulations and capital requirements to cover potentially bad loans.

Key has about 13,500 employees; First Niagara has about 5,400. Analysts believe some jobs will be cut in New York.

The deal will put Key just a hair behind Fifth Third in size. Cincinnati-based Fifth Third has about $142 billion in assets and remains -- for now -- the largest Ohio-based bank.

This is the first big acquisition under Mooney, who became CEO four years ago. In a conference call this morning with analysts, Mooney deflected whether Key is looking for other big deals to grow bigger. "We are excited at the opportunity we have in front of us (to fold in First Niagara)", she said.

Investors pushed down shares of Key on Thursday as rumors of the deal leaked. Key closed Thursday down 4 percent, at $13.38. 

On paper, Key will become the 13th-largest bank. But if you look at traditional deposit banks with a branch network, that knocks out Mellon, State Street, Goldman Sachs and Morgan Stanley, putting Fifth Third at No. 8 and Key at No. 9.

Key and First Niagara have been competitors. In Greater Buffalo for example, First Niagara has been No. 2 behind M&T. Key has been No. 3.

Credit to:

Teresa Dixon Murray, The Plain Dealer 
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