Magazine article American Banker

Keycorp Stumbles in Northwest, but Comes Up Smiling

Magazine article American Banker

Keycorp Stumbles in Northwest, but Comes Up Smiling

Article excerpt

In Washington State, Keycorp is showing that even a poorly executed merger can make money.

At times, it has seemed that virtually everything that could go wrong has gone wrong in the Albany N.Y.-based company's $807 million acquisition of Puget Sound Bancorp.

After Ken took over Washington's largest independent commercial bank in January, computer glitches massively disrupted service. In one case, thousands of customers found their automated teller cards no longer functioned.

Then there were the cultural problems. Employees of the laid-back Tacoma-based Puget Sound chafed under the strict rules and faster work pace of Key.

Turnover has been high. And service suffered as staff members were shifted around and procedures were changed.

As if that weren't enough, Puget Sound's former chief executive, W.W. Philip, opened his o\,\n bank in Tacoma, taking thinly disguised potshots at Keycorp.

Executives of the New York bank company were incensed, but many observers blamed them for failing to negotiate a noncompete clause as part of the merger agreement.

|Neighborhood Bank' or Bully?

Worse still, the company that calls itself "America's neighborhood bank" sometimes seemed more like the neighborhood bully.

That impression was magnified when Key's chief executive, Victor J. Riley Jr., flew to Tacoma in June to personally fire Hans J. Harjo, the local banker who served as Key's chief in the Evergreen State.

In a startling disregard for corporate niceties, Key officials openly said that Mr. Harjo had been fired. And they blamed him for letting the bank's image slip.

That didn't play well locally. Mr. Harjo is a Washingtonian who learned his trade as a bank president in Seattle's Scandinavian Ballard district. The cashiering of a man with close ties to the community fueled Key's image as a heavy-handed outsider. …

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