Magazine article American Banker

A Key-National City Deal Not Expected to Create A True Rival to Bank One

Magazine article American Banker

A Key-National City Deal Not Expected to Create A True Rival to Bank One

Article excerpt

A merger of KeyCorp and National City Corp. would create an Ohio banking giant with $164 billion of assets and $93 billion of deposits, but it would still be far behind Bank One Corp. in terms of Midwest dominance.

Rumors of such a combination caused both companies' shares to surge this week.

The rally continued Thursday, when KeyCorp's stock closed at $36.9375, up $2, and shares of National City ended the day at $72.125, up $1.

A marriage of the two companies, both based in Cleveland, would form the eighth-largest U.S. bank, just behind San Francisco-based Wells Fargo & Co., which has $201 billion of assets.

But it would still be small when compared to Bank One, of Chicago, which boasts $250 billion of assets and deposits of $154 billion.

"A combination of KeyCorp and National City would look like a national franchise, but it would not have the market share of one," said Diana Yates, a bank analyst with A.G. Edwards.

"There would be nothing cohesive about a combination between the two companies," added Nancy Bush, of Ryan Beck & Co.

"It would be a big amorphous mass."

Analysts pointed out that a combined KeyCorp-National City would likely be asked to make substantial divestitures by the Justice Department, because of the two banks' substantial overlap in Cleveland.

KeyCorp has $12 billion of the city's deposits while National City has $7.5 billion. A merger of the two would give the company 45% of the Cleveland market, Ms. …

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