KeyCorp's hopes of remaining independent could be in the hands of James E. Bennett, a professorial, white-haired consultant who spent 30 years working in the Cleveland office of McKinsey & Co.
Mr. Bennett, 55, was hired a year ago to devise a strategic plan to improve KeyCorp's profitability and make the company less vulnerable to a takeover.
Mr. Bennett, a senior executive vice president, still speaks very much like a consultant. Asked to explain where KeyCorp is headed, he pulls out charts to show how the company will reach "top-tier performance through distinctiveness."
"Distinctive, balanced organization," says one box in a flow chart. "Strong portfolio of businesses with marketplace distinctiveness and outstanding people" reads another. "Distinctive sales, marketing, and technology competencies" reads a third box.
What does it all mean?
Mr. Bennett, in his consultant-like cadence, said execution will count a lot more than talk. "Unless KeyCorp achieves top-tier performance in a consolidating industry, it's not going to be one of the winners in the long run," he said. "It's hard to overstate the amount of pressure we all feel to improve our performance."
Mr. Bennett acknowledges that KeyCorp must do more planning. He gives the banking company a D for its past performance in planning but says it has improved somewhat.
"Last year, I'd give it a C-plus," he said. "This year, I'm hoping for a B-I'd like it to be a B-plus."
On the cost-cutting side, Mr. Bennett is advising how to slash expenses by $100 million by the end of 2000, and by another $100 million by the end of 2001.
Until his arrival, Mr. Bennett said, costs were not a primary focus. They have been at other banks, including Cleveland-based National City Corp., which some investors believe would like to buy KeyCorp.
Part of Mr. Bennett's cost-cutting strategy is to strip away underperforming units. The bank recently sold 28 branches on New York's Long Island to Dime Bancorp for a $210 million premium. KeyCorp is also considering selling its $1.4 billion credit card operation and its $4 billion of indirect automobile loans.
Mr. Bennett says that although the company's number of employees rose 5% last year, to 25,862, much of the increase came from acquisitions. KeyCorp's internal work force declined 3%, he said.
"Our strategy, rather than saying what we intend to do, is to show we're well along the way to reaching our overall target," Mr. Bennett said.
Henry Dickson, an analyst with Salomon Smith Barney, said "it's too early to say" how successful Mr. Bennett will be. "That stuff doesn't happen overnight. Let's watch and see some of the business decisions they make."
Mr. Bennett and KeyCorp may not have much time left.
"Shareholders are becoming a little more impatient and are demanding an acceleration of promised increases in financial performance," said Joseph Duwan, an analyst with Keefe, Bruyette & Woods Inc. "It's tough to say how much time they have. It's also a relative game. Some of the leaders in the industry are pulling away from the pack. It continues to be a challenging environment."
