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By Jeff Bater
Dec. 7 — A congressman, citing concerns about possible job loss in upstate New York, is raising objections to the proposed merger of First Niagara and KeyCorp banks, saying the deal would reduce competition.
Rep. Brian Higgins (D-N.Y.) told the Justice Department and the Federal Trade Commission in a letter dated Dec. 7 that his own examination of data confirms the proposal fails the market concentration test across upstate New York, where the two banks each have an extensive branch network.
“Our findings conclude the deal, as currently proposed, violates federal antitrust law and therefore cannot be allowed to proceed,” he said in a news release.
Higgins' letter suggested regulators compel the banks to cancel the merger altogether, spin off First Niagara's upstate branch network as an independent organization, or sell the upstate network to an organization that doesn't have significant operations in upstate New York. He said, adding that the proposal would “greatly reduce banking competition across upstate New York” and that any of his three options to a deal is likely to “reduce the negative local jobs impact associated with this proposed merger.”
KeyCorp, Ohio's second-largest bank, agreed to buy First Niagara Financial Group Inc. in a $4.1 billion cash-and-stock deal, according to an announcement in October. KeyCorp is headquartered in Cleveland; First Niagara is based in Buffalo, N.Y., which is in Higgins' district.
“While I am very concerned about the potential negative local employment impact associated with this purchase, I know that the federal authorities cannot interfere with a proposed merger on that basis,” Higgins said in the letter. “Anti-trust concerns are the only basis under existing law to stop a merger among banks of this size.”
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