Gillian Tan is a Bloomberg Gadfly columnist covering deals and private equity. She previously was a reporter for the Wall Street Journal. She is a qualified chartered accountant.

Will New York Governor Andrew Cuomo be able to add deal killing to his list of achievements? Probably not. 

KeyCorp and First Niagara Financial Group each shed roughly 5 percent on Thursday -- and while it's true that the decline comes after Cuomo released a letter to regulators objecting to their $4.1 billion merger, it's more likely the drop reflects the broader selloff in banking shares.  

In fact, investors are still pretty certain that the transaction will win approval: First Niagara is trading at a discount of just 4 percent to the cash-and-stock offer price, meaning they're rightfully brushing off Cuomo's opposition. And the recent selloff means any wager on the deal now will result in a bigger payoff if (or when) bank stocks rebound.

Banking On It
Investors remain reasonably confident that a deal will be approved by regulators.
Source: Bloomberg

He argues that the transaction would have a "devastating impact" on the retail banking industry in upstate New York, in part due to reduced competition.  But any fears of "unhealthy market concentration" can be easily solved through minimal divestitures, which KeyCorp has been prepared for since day one. In an earnings call last month, KeyCorp Chairman and CEO Beth Mooney said the bank was continuing to work with the Department of Justice, which has the final call on the number of branches and deposits that it must shed (it has previously estimated roughly $2 billion in deposits may need to be divested). 

Also, Cuomo's belief that consumers will be driven to non-bank alternatives due to restricted access to bank-offered products and services seems overblown. Compass Point analysts point out that consumers will be able to turn to the likes of Bank of America, M&T Bank and Citizens Financial Group and hundreds of smaller banks and thrifts.

One Deal's Decent Odds
Wall Street believes the KeyCorp-First Niagara deal has a better chance of completion than many other pending deals.
Source: Bloomberg

Cuomo's stance will likely encourage Senator Chuck Schumer to again weigh in on the deal, but that, too, shouldn't lift anyone's heart rate. Even though Schumer raised flags against deals such as United Airlines's acquisition of US Airways Group -- which ultimately collapsed -- others that crossed his path like SoftBank Group's acquisition of Sprint made it to the finish line. So did Live Nation Entertainment's purchase of Ticketmaster Entertainment, which was made possible due to agreed divestitures. 

The takeaway? You can always bank on a politician weighing in with his or her opinion -- and this time,  you can also bank on Cuomo's view failing to derail this deal. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Gillian Tan in New York at

To contact the editor responsible for this story:
Beth Williams at