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Bank holding companies

Consolidation in the Finance Sector: Cleveland's Banking Giants under Pressure

Strategic Insights

— 2 min read

Cleveland, once a hub for two of the nation's major bank holding companies, National City Corp. and KeyCorp, may soon see its duopoly challenged as the pace of consolidation in the finance sector reaches a fever pitch. Industry observers speculate that it will be difficult for the two local banks to remain independent in the face of looming mergers and acquisitions, which could reshape the banking landscape.

Key Takeaways:

  • The recent announcements of impending mergers of BankAmerica Corp. with NationsBank Corp. and Banc One Corp. with First Chicago NBD Corp. have sparked speculation about the future of National City and KeyCorp.
  • National City spokesman Dan Shingler declined to comment on the company's potential involvement in future mergers or acquisitions.
  • According to Fred Cummings, bank industry analyst with McDonald & Co. Securities in Cleveland, a more likely merger than BankAmerica and National City would be a U.S. Bancorp-KeyCorp merger, which would bring together two similar-size companies with assets totaling $71 billion and $74 billion, respectively.
  • David Bowers, chairman of the department of banking and finance at the Weatherhead School of Management at Case Western Reserve University, stated that the two local banks will need to become national themselves or become part of another national franchise to remain competitive.
  • The size of the sharks in the banking industry changed dramatically last week, with the new BankAmerica boasting total assets of $570 billion, dwarfing the combined assets of KeyCorp and U.S. Bancorp.
  • Community development officials are concerned about the implications of consolidation on local economies, with Charlie Webb, vice president of the Cleveland Area Development Corp., stating that the No. 1 issue today in business retention is the question of mergers and acquisitions.
  • National City Corp. has about 4,700 employees in the Greater Cleveland area, while KeyCorp employs about 8,200 in Northeast Ohio.

Statistics:

  • National City Corp. has $74 billion in assets.
  • KeyCorp has $71 billion in assets.
  • The new BankAmerica would have total assets of $570 billion.
  • KeyCorp's service area could potentially fill holes in Ohio and other Midwestern states created by the BankAmerica/NationsBank deal.
  • The merged BankAmerica would have significant gaps in its service area, including Ohio and other Midwestern states.

Sources:

  • Mr. Cummings, Fred, bank industry analyst with McDonald & Co. Securities in Cleveland. (No date specified)
  • Mr. Crabtree, Ben, securities analyst with Dain Rauscher. (No date specified)
  • Mr. Fuller, John, KeyCorp spokesman. (No date specified)
  • Mr. Bowers, David, chairman of the department of banking and finance at the Weatherhead School of Management at Case Western Reserve University. (No date specified)
  • Mr. Webb, Charlie, vice president of the Cleveland Area Development Corp. (No date specified)

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