Bank of Nova Scotia Granted Approval to Acquire Up to 15% of KeyCorp Shares
The Federal Reserve Board approved the application of The Bank of Nova Scotia (BNS), located in Toronto, Canada, to acquire up to 14.99% of the voting shares of KeyCorp, based in Cleveland, Ohio, and indirectly, KeyBank National Association. This decision, effective December 12, 2024, was made following the completion of the comment period after the announcement published in the Federal Register on September 12, 2024, with no public objections.
BNS, a financial holding company, will increase its existing 4.93% ownership in KeyCorp to as much as 14.99%. This acquisition does not represent a controlling interest as defined in the Bank Holding Company Act and does not trigger regulatory control assumptions. The Bank of Nova Scotia is the largest third-largest insured deposit-taking institution in Canada, with approximately $1.0 trillion in consolidated assets. Meanwhile, KeyCorp is the 26th largest institution in the U.S., with approximately $189.8 billion in consolidated assets, and KeyBank operates in multiple states.
The Federal Reserve's review assessed the potential competitive effects of the proposal and concluded that it would not have a significantly adverse effect on competition or the concentration of resources in any relevant banking markets. Additionally, the Department of Justice indicated that the proposal was not expected to negatively affect competition. BNS’s capital levels are above the minimum required under the Basel Capital Accord, and it is believed that the organization has sufficient resources to cover the costs of the proposal.
The Board also evaluated both BNS and KeyCorp's financial and managerial resources, compliance records, and the effectiveness of anti-money laundering measures. The Office of the Superintendent of Financial Institutions (OSFI) in Canada confirmed that BNS is subject to comprehensive auditing on a consolidated basis as the primary country supervisor.
Regarding the impact on the community, the Board assessed KeyBank's performance under the Community Reinvestment Act (CRA). KeyBank received an "Outstanding" rating in its most recent assessment from the Office of the Comptroller of the Currency (OCC) on April 3, 2023. KeyBank's track record of meeting the credit needs of its communities, including low- and moderate-income neighborhoods, supported the approval.
The Federal Reserve also evaluated the transaction's effects on financial stability and concluded that acquiring a non-controlling interest in KeyCorp would not pose larger or more concentrated risks to the stability of the U.S. banking or financial system. The acquisition is expected to strengthen KeyCorp's capital position and improve its ability to serve customers without significant negative impacts, such as excessive concentration of resources or risks to the stability of the U.S. banking system.
The approval is contingent upon BNS's compliance with all conditions and commitments made during the application process and is subject to BNS receiving all necessary regulatory approvals. The transaction may be completed no earlier than the 15th calendar day and no later than three months from the effective date of the order, extendable for good cause if necessary.
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