Fitch: FNFG and KEY Ratings Unaffected by Deal for HSBC Branches

There is no impact on the ratings for First Niagara Financial Group, Inc. (FNFG) or KeyCorp (KEY) from today's announcement that FNFG has agreed to sell 37 HSBC branches to KEY, according to Fitch Ratings. The branches, which are located in the Buffalo and Rochester markets, hold about $2.4 billion in deposits and $400 million in loans. KEY will pay a deposit premium of 4.6% or approximately $110 million.

The transaction includes the 26 HSBC branches that were to be divested under FNFG's agreement with the Department of Justice in connection with the HSBC acquisition deal announced in August 2011. FNFG's and KEY's ratings will not be affected by this transaction.

Fitch had expected the sale of these branches given the agreement with the DoJ. Although the expected deposit premium is less than FNFG paid, it is within market expectations and recent announcements by FNFG. The transaction fits with KEY's strategic plan to enhance its core retail franchise. The acquisition will have a minimal effect on KEY's capital position.

In December 2011, Fitch placed all of FNFG's ratings on Rating Watch Negative given the material change in the revised pro forma capital structure due to changes in the financing mix relating to the HSBC deal. For further details, please see Fitch's press release dated Dec. 7, 2011. In November 2011, Fitch affirmed all of KEY's ratings with a Stable Outlook. For further details, please see Fitch's press release dated Nov. 18, 2011.

Additional information is available at 'www.fitchratings.com'.

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