KeyCorp and First Niagara Financial Group Inc. have agreed to sell 18 of First Niagara’s branches around Buffalo, with close to $1.7 billion in deposits, the Department of Justice announced Thursday.
The sale resolved antitrust concerns regarding KeyCorp’s planned $4.1 billion acquisition of First Niagara and will ensure that the transaction does not harm competition for retail banking in the Buffalo area, the U.S. Justice Department said.
The companies have agreed to divest 13 branches in Erie County and five branches in Niagara County. The divested assets include commercial loans associated with divested banks. The companies also will suspend existing agreements and will not enter into new, non-compete agreements with their small-business and middle-market relationship managers and their retail regional and branch managers.
The banks have agreed to sell or lease branches closed within two years of the consummation of the merger, the Justice Department said.
“Today’s agreement will ensure that customers in Buffalo and other New York markets will continue to enjoy the benefits of competition among banks with retail branch networks,” said Renata Hesse, principal deputy assistant attorney general of the Justice Department’s antitrust division, in a statement.
The merger still requires final approval of the board of governors of the Federal Reserve System.
The Justice Department said it will advise the Federal Reserve Board that it will not challenge the merger provided that the banks divest the branch offices and that the parties’ commitments to the department are included as a condition to any order the Federal Reserve Board enters allowing the transaction.
As a result of the acquisition, KeyCorp will become the 13th largest bank in the nation, with about $135 billion in assets, $99.8 billion in deposits and more than 1,000 branches across 15 states.
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