KeyCorp’s Acquisition of First Niagara Approved by Regulators

  • Combined lender will have about $133 billion of assets
  • Deal approved after Senator Senator Schumer dropped opposition

KeyCorp’s $4.1 billion bid to buy First Niagara Financial Group Inc. has won approval from the banks’ federal regulator, clearing the way for the combined company to be among the top 20 U.S. banks by assets.

The acquisition by Cleveland-based KeyCorp got the go-ahead from the Federal Reserve, according to a Tuesday announcement. Buffalo, New York-based First Niagara, which lends in New York and surrounding states, is cleared to add its $40 billion in assets to what would be a combined institution of about $133 billion in assets. The banks announced the deal in October and are still months away from their estimated completion date.

New York politicians had criticized the merger, with U.S. Senator Chuck Schumer noting in a letter that he was concerned the deal would have a major impact on jobs in the state. But the deal won Schumer’s support on Monday after KeyCorp agreed to reduce its planned job cuts.

KeyCorp agreed to cut no more than 250 positions after the merger and then hire at least 500 people in the next three years, Schumer said in a written statement. That would amount to a net addition of jobs over the next five years, the statement said.

The review of the deal had also faced some additional scrutiny over a Justice Department investigation into First Niagara’s minority-lending practices, two people familiar with the matter had said. The probe into whether First Niagara violated a federal law that prohibits discrimination in issuing loans didn’t derail the deal and the bank hasn’t faced any legal or enforcement actions.