Standard & Poor's Affirms Ratings on KeyCorp Following McDonald & Company Acquisition

Strategic Insights -

Standard & Poor's has affirmed its ratings on KeyCorp and its units after the company's acquisition of McDonald & Company Investments Inc. The acquisition, valued at $650 million, will be financed through an exchange of stock and will enhance KeyCorp's investment banking and capital markets operations through McDonald's established underwriting, distribution, and research capability. The acquisition is consistent with KeyCorp's strategy to diversify revenue streams and expand its offerings of nontraditional bank products.

Key Takeaways:

  • Standard & Poor's affirmed its ratings on KeyCorp and its units following the acquisition of McDonald & Company Investments Inc.
  • The acquisition, valued at $650 million, will be financed through an exchange of stock and will have a modest impact on KeyCorp's tangible capital measures.
  • KeyCorp continues to exhibit a modestly aggressive capital policy and is expanding its offerings of nontraditional bank products through recent acquisitions.
  • The acquisition of McDonald & Company is consistent with KeyCorp's strategy to diversify revenue streams and enhance its investment banking and capital markets operations.
  • KeyCorp ranks among the 15 largest banks in the United States and has geographically diverse branch operations in 12 states.
  • The acquisition is expected to impact KeyCorp's financial measures, but Standard & Poor's noted that the measures are still appropriate for the rating category.

Statistics:

  • Acquisition value: $650 million
  • Number of states with geographically diverse branch operations: 12
  • Rank among the largest banks in the United States: 15
  • Tangible capital measures impact: modest
  • Number of recent acquisitions: specialty financial service providers involved in residential mortgages and small-ticket commercial leasing

Sources:

  • Standard & Poor's CreditWire, 6/15/98
  • http://www.ratings.standardpoor.com