A New York community group is asking the Federal Reserve to delay approval of KeyCorp's plan to open a string of supermarket branches in New Hampshire.
Bronx-based Inner City Press/Community on the Move objected that though KeyCorp wants to open seven branches in the Granite State, it plans to close nearly 400 of its 1,284 branches by 2000. About 200 of those closings are slated to occur in the next 12 months.
In addition, the company has closed 149 branches in the past two years.
"The proposed transaction is not bad in and of itself, but we think KeyCorp's record is not good, and made even more troubling by its repeated public projections of massive branch closures," said the group's executive director, Matthew Lee.
Inner City Press has asked the Federal Reserve Bank of Cleveland to require KeyCorp to identify each branch it plans to close in the next year.
In addition, Mr. Lee said he suspects KeyCorp of prescreening potential loan applicants who are members of a minority by discouraging them from coming in to fill out loan applications. Prescreening is illegal under the Fair Housing Act and the Equal Credit Opportunity Act.
"For the few loans they do make to African-Americans, there are no denials, and that's a red flag to us," Mr. Lee said.
KeyCorp spokesman John Fuller argued that Mr. Lee's objections are unrelated to the pending application.
"While we don't know where they'll be, we have said we may be closing a number of branches over the next several years," Mr. Fuller said. "But the New Hampshire situation doesn't figure into that - we're expanding services there, and we've followed the right process on this application."
But Mr. Lee's protest has already had an effect on KeyCorp's application. The Fed on June 14 asked KeyCorp to provide information on past branch closings, including how many have occurred in low-income and moderate-income census tracts.
"Matt Lee has certainly caused the Fed to be more cautious with this application," said Francis X. Grady, a partner with the Cleveland law firm Grady & Associates. "He is forcing regulators to be very thorough."
