SCHUMER URGES FEDS TO EXTEND WRITTEN COMMENT PERIOD & CONSIDER HOLDING PUBLIC HEARINGS FOR UPSTATE NY RESIDENTS TO VOICE THEIR CONCERNS ABOUT KEYBANK’S PLANS TO ACQUIRE FIRST NIAGARA BANK; SENATOR SAYS REGULATORS SHOULD DO WHAT IT TAKES TO SEE THAT UPSTATE NY RESIDENTS ARE GIVEN SUFFICIENT TIME TO OFFER THEIR OPINIONS
Schumer Has Vocally Expressed Serious Concerns That The Acquisition By The Ohio-Based Bank Could Mean Layoffs For Local Workforce & Negatively Impact Regional Economies In Upstate NY
Schumer: Upstate New Yorkers Deserve To Have Their Voices Heard
U.S. Senator Charles E. Schumer today urged the Federal Reserve to both extend the required 30-day comment period, which is set to expire at the end of the month, and to hold public hearings on the proposed merger’s economic impact on the region and the newly constituted bank’s plans for community reinvestment. Since the proposed acquisition was officially announced, Schumer has raised serious concerns about the combination of First Niagara and KeyBank, especially since the potential purchase could negatively impact the regional economy and local communities throughout upstate New York. Since the merger would have such widespread impact on communities across Upstate New York, Schumer said it is vital that members of these communities have the opportunity to express their concerns by engaging in discussions directly with bank representatives in a public forum.
“The proposed purchase of First Niagara by KeyCorp, another bank with a large overlapping upstate presence, should be a giant red flag for federal regulators,” said Senator Schumer. “Because the potential economic and job force impacts are so significant, it is essential that federal regulators that must judge this proposed merger allow members of these local communities – those who will be the most impacted – to have their voices heard.”
Following the news that the Board of KeyCorp approved plans to acquire the Buffalo-based First Niagara Financial Group, Schumer immediately urged the company to ensure that the jobs across Upstate New York are protected. Schumer said that while KeyBank has been a part of the Buffalo community for years, given the significant overlap in the footprints’ of the two banks, this $4.1 billion takeover could mean job losses across Upstate New York and negatively impact employees and the regional economy.
Schumer continued: “My opinion is very clear: these jobs are vital to local communities and regional economies, and the employees at First Niagara have been an integral driver in the company’s success over the years – so they should continue to remain a critical part of KeyCorp if this merger goes through. Moreover, every element of this potential purchase should be reviewed and critiqued – by both regulators and the Upstate New York communities. This means fully studying the deal’s impact on competition, community reinvestment and providing ample opportunity for the public to voice their concerns. If this means extending comment deadlines and scheduling more hearings, then so be it.”
In addition to the importance of receiving comments from local residents, Schumer said the Federal Reserve Board should take into account the fact that this 30-day comment period overlaps the Christmas-New Year’s holiday. Schumer said it would be reasonable for the Fed to conclude that an extension of this period would be appropriate under the circumstances.
KeyCorp and First Niagara have a significant presence in Upstate New York:
Central NY and North Country:
- KeyCorp’s CNY region has 53 branches and 360 employees. First Niagara has 65 branches and 650 employees. That is more than 1,000 total workers.
- KeyCorp and First Niagara provide a combined 3,100 total WNY jobs.
Rochester-Finger Lakes Region:
- First Niagara employs about 300 people; KeyCorp, about 175 – for a total of 475 people. Combined, the two banks have approximately 30 Rochester-area branches.
- Key Bank lists approximately 1,000 total staff in the Capital Region. First Niagara has over 1,000 employees. That is a total of roughly 2,000 jobs. Combined they have over 70 branches in the region.
KeyCorp executives announced last month that its Board of Directors had approved a proposed deal to purchase First Niagara for more than $4 billion. While this acquisition has been lauded by executives and the Boards of these two institutions, Schumer has raised questions about the deal and specifically expressed concerns about the deal’s impact on the hard-working employees of First Niagara and KeyBank across upstate New York.
A copy of Senator Schumer’s letter to the Federal Reserve appears below:
December 20, 2015
Daniel K. Tarullo
Board of Governors of the Federal Reserve System
20th & Constitution Avenue, N.W.
Washington, D.C. 20551
Loretta J. Mester
President & Chief Executive Officer
Federal Reserve Bank of Cleveland
1455 East Sixth Street
Cleveland, OH 44101-2566
Governor Tarullo and President Mester,
On October 30, 2015, representatives from KeyCorp, based in Cleveland, OH, announced its plan to acquire First Niagara Financial Group, based in Buffalo, NY. As has been reported, this combination would create the 13th largest financial institution with over $138 billion dollars in assets and 1,366 branches. This potential acquisition would have a particularly significant impact on the regional economies and local communities throughout upstate New York, as these two banks collectively employ more than 6,000 people and currently operate more than 400 branches across the state of New York.
Given the sizeable presence and economic influence these institutions have in upstate region of New York, I believe that the opportunity for interested and impacted parties to weigh in and offer their comments on the potential public impact of the proposed acquisition is absolutely critical. I am aware that KeyCorp filed its application for consideration of the proposed acquisition during the first week of December, and that the 30-day comment period, required under 12 CFR §225.16(b), is currently open; however, given the timing of the comment period and the considerable ramifications such a merger would have on the regional economies of upstate New York, I believe that it would not only be appropriate but necessary to extend the initial 30-day comment period for an additional 30 days, to allow for interested, impacted, and knowledgeable parties to weigh in and offer their input and analysis prior to your further consideration of the filed application.
KeyCorp has stated that it intends to generate cost savings of $400 million through “cost synergies” based substantially on the fact that there is a high degree of market overlap in the existing footprint of KeyCorp and First Niagara across upstate New York. Further, KeyCorp has highlighted the fact that greater than 30 percent of the First Niagara branches are within two miles of a KeyBank branch. Given these statements and facts, it is clear that there is justifiable concern that this acquisition will a have significant impact on both employment and competitiveness within the state of New York.
In addition to the communal and economic significance of the potential acquisition, and the importance of receiving comments from a broad range of interested parties on these grounds, the Federal Reserve Board (the Board) should take into account the fact that this 30-day comment period spans the winter holiday season. The Board must provide adequate time for public comment and ensure that interested community stakeholders are able to weigh in, and given the number of federal holidays that occur during the prescribed 30-day period, it is reasonable and appropriate for the Board to conclude that an extension of this period would be advisable.
An extension of the public comment period is of immediate importance, but the Board should also consider holding public hearings in local communities prior making a determination of approval or rejection of KeyCorp’s application. Members of the community should be afforded the forum to publicly express their concerns and engage in discussions with bank representatives regarding its plans for further community reinvestment before the Board’s final consideration of the acquisition’s anticompetitive impact and the newly formed bank’s ability to serve the needs of the impacted communities.
I appreciate you consideration of this request and hope that you will immediately extend the comment period for an additional 30 days until January 31, 2016. Additionally, I would ask that the Board strongly consider holding public hearings prior to any final determination of KeyCorp’s application to acquire First Niagara Financial Group. Please feel free to reach out to me or my staff if any further discussion of these issues would be helpful. I recognize that this decision must be made in an expedited timeframe and hope that the Board can act quickly so as to ensure that all comments and analysis of this potential combination are received and thoroughly analyzed by the Board.
Thank you again for your timely attention to this important matter.
Senator Charles E. Schumer
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