April 28 — KeyCorp agreed to divest 18 branches to secure antitrust approval of its proposed $4.1 billion purchase of First Niagara Financial Group Inc., the Justice Department (DOJ) announced.
The Justice Department said April 28 that it will allow the merger after the banks agreed to divest the First Niagara branches in and around Buffalo, N.Y.
In addition to the divestitures, the companies agreed to suspend non-compete agreements with their small-business and middle-market relationship managers, and retail regional and branch managers, in New York for 180 days after the merger closes. The companies will also sell or lease New York branches they shutter within two years after the deal to other depository institutions.
The Federal Reserve Board must still approve the deal between the companies, which have approximately $99.8 billion in combined deposits, $135 billion in assets and more than 1,300 branches across 15 states. Shareholders of both companies approved the merger in March.
The merger, announced in October 2015, drew opposition from New York politicians.
Rep. Brian Higgins (D-N.Y.), whose district includes Buffalo, objected to the proposed merger in a Dec. 7 letter to the DOJ and the Federal Trade Commission in which he outlined concerns about job losses.
Sen. Charles Schumer (D-N.Y.) said in a Dec. 20 news release that the merger “should be a giant red flag for federal regulators” and urged the Federal Reserve to extend a public comment period (247 Banking Daily, 12/28/15).
New York Gov. Andrew Cuomo pressed the Federal Reserve to block the deal in a Feb. 10 letter, saying a merger would reduce competition in upstate New York, constrict access to bank services, and cause the loss of thousands of jobs (28 Banking Daily, 2/11/16).
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