KeyCorp (NYSE:KEY) shares advanced 0.6% on Friday afternoon after reports emerged that First Citizens BancShares Inc. is evaluating possible acquisition targets that could include the Cleveland-based lender.
According to a report from Bloomberg News that cited people familiar with the discussions, First Citizens has asked advisers to prepare a list of potential transactions as it aims to exceed a $250 billion asset threshold. The Raleigh, North Carolina-based bank is pursuing deals that could give it greater scale, a strategy its leadership sees as a way to better absorb regulatory and compliance expenditures.
Sources told Bloomberg that KeyCorp is among the banks being considered in that exercise. First Citizens has also engaged in talks with regulators about the prospect of a significant acquisition, the people said.
Officials at the Federal Reserve have removed some regulatory citations after First Citizens addressed the underlying issues, the report added - a development that could make a large transaction more feasible from a regulatory standpoint.
Regulatory scrutiny of bank stability has remained heightened following the 2023 banking crisis, which led to three failures, including Silicon Valley Bank. First Citizens previously acquired that lender at a discount after a deposit run, a move noted in the reporting.
A spokesperson for KeyCorp declined to comment. A spokesperson for First Citizens declined to comment on M&A and regulatory matters. The Federal Reserve also declined to comment.
The market move on KeyCorp shares was modest, reflecting investor attention to reports of strategic activity by First Citizens and the potential regulatory considerations tied to any large-scale purchase. The deliberations described in the report center on gaining scale to manage the growing burden of regulatory and compliance costs that can accompany expansion.
Context and next steps
- First Citizens has requested advisers to assemble possible deal candidates as it explores options to grow beyond $250 billion in assets.
- Discussions with regulators have taken place about pursuing a major acquisition; some prior regulatory citations were removed after the bank addressed related issues.
- KeyCorp is among the institutions reportedly under consideration, and spokespeople for the parties named have declined to comment.