Antitrust Law Daily Wrap Up, ACQUISITIONS & MERGERS NEWS: NY Governor Cuomo urges rejection of Key Bank-First Niagara deal, (Feb 12, 2016)
Organizations Mentioned:First Niagara Financial Group, Inc. | KeyCorp | Office of the Comptroller of the Currency
By Greg Hammond, J.D.
New York Governor Andrew M. Cuomo sent a letter on February 10 to the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, and the Justice Department Antitrust Division, urging the rejection of KeyCorp’s (Key Bank) proposed acquisition of First Niagara Financial Group, Inc.
If allowed, the transaction “will have a devastating impact on the retail banking industry and consumer access in Upstate New York,” Cuomo writes. Specifically, the letter claims that the proposed acquisition would reduce retail banking competition by limiting consumer access in the Upstate New York region to an “unacceptably low level,” would result in thousands of lost jobs, and would exacerbate the problem of limited branch access.
Analyzing the proposed deal under the Herfindahl-Hirschman Index (HHI), the governor asserts that the Buffalo-Niagara Metropolitan Statistical Area has a pre-merger HHI of 3,157 and that the post-merger HHI would be 3,591—“a considerable jump of 434 on the HHI.” Consequently, the governor asserts that “not only do the pre- and post-acquisition HHI scores significantly exceed the DOJ’s standards for a healthy banking marketplace, but the change in the HHI index as a result of the merger is 2.17 times the reasonable limit established by the DOJ and FTC Guidelines. In simpler terms, the proposed merger would lead to Key Bank having an anti-competitive market saturation of approximately one third of the total deposits in the Buffalo area.”
Lastly, Governor Cuomo claims that the transaction will not lead to increased convenience to the communities impacted to support that the negative impact is “clearly outweighed in the public interest by the probable effect of the transaction in meeting the convenience and needs of the community to be served.” Rather, “the immediate impact to the community is negative, with lost jobs and branch closures expected as Key Bank consolidates its services,” Cuomo writes.
Companies: KeyCorp; First Niagara Financial Group, Inc.
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