KeyCorp and First Niagara Financial Group have agreed to sell 18 First Niagara branches in the Buffalo region of New York to Northwest Bank, a subsidiary of Northwest Bancshares, in order to avoid antitrust concerns emerging from the proposed KeyCorp-First Niagara merger.
The deal will include sale of 13 branches in Erie County and 5 branches in Niagara County, New York, which comprise $1.7bn in deposits and $0.5bn in loans.
"The divestitures will ensure that the transaction does not harm competition for retail banking services in the Greater Buffalo area," the US Department of Justice said in a statement.
In addition, the companies have agreed to restrict new, non-compete agreements and suspend existing contracts with their small business and middle market relationship managers and their retail regional and branch managers, in New York, for 180 days post completion of the merger.
The companies have also agreed to offload or lease branches shut down within two years of the merger’s completion in the state to other depository institutions.
Justice Department principal deputy assistant attorney general of antitrust division Renata Hesse 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."
The $4.1bn cash-stock transaction between Cleveland-based KeyCorp and Buffalo-based First Niagara was announced in October 2015. The deal, subject to regulatory approval, would make KeyCorp the 13th largest bank in the nation with nearly $135bn in assets, $99.8bn in deposits and over 1000 branches in 15 states.