County executive, congressman express reservations in letters to Federal Reserve
Erie County Executive Mark C. Poloncarz was joined Friday by Congressman Brian Higgins and representatives of the WNY Law Center and PUSH Buffalo to voice his opposition to a proposed acquisition of First Niagara Financial Group Inc. ("First Niagara") by KeyCorp ("KeyBank").
They said the takeover, as presently constructed, would greatly reduce banking competition in the already-underserved Western New York region, with two banks then controlling 83 percent of the Buffalo-Niagara marketplace. This, they added, would further reduce the number of bank branches available to consumers despite the already-existing need for expansion of such branches and related services to large sections of the Buffalo-Niagara Metropolitan Statistical Area ("MSA").
"Banking acquisitions of this size may be good for the corporate bottom line, but are bad business for the thousands of consumers who rely on these institutions for their everyday financial and banking needs," Poloncarz said. "If this sale is completed, the WNY banking market will be dominated by two institutions, thereby creating an anticompetitive marketplace. A reduction in competition also means less choice for consumers, fewer jobs for area banking professionals, and increased pressure on the few remaining banking outlets.
"Several areas in the Buffalo-Niagara market are already underserved by the banking community, with a lack of branches and services that affects both urban and rural populations. All residents should have access to reliable, nearby banking services regardless of where they live, but this acquisition will diminish that access and also potentially eliminate thousands of jobs."
Higgins added, "With well over 3,000 jobs on the line and no clear answers on what a final merger will look like in terms of services and employment in Western New York, this community has every right to be concerned."
After careful analysis, he told the U.S. Department of Justice and Federal Trade Commission the proposed merger fails the market concentration test across upstate New York.
"Residents across the Buffalo-Niagara MSA, especially those in low- to moderate-income areas, have limited access to banking and financial resources," said Thomas Keily of the Western New York Law Center. "Many in our community are left with no alternative but to use check cashing and wire services that charge extremely high fees. If residents had access to local branches and services, thousands of residents would have access to necessary wealth-building financial tools."
Letters to the Federal Reserve expressing these concerns were authored by Poloncarz and Higgins, as well as by the WNY Law Center in conjunction with other agencies. They expanded on these issues while also noting the impact that thousands of job cuts would have on the regional economy.
The U.S. Federal Reserve and the U.S. Department of Justice must approve the proposed acquisition.