Confirming its announced intention to focus on urban markets, KeyCorp said the single nationwide bank it will form this year from the present 12 will be divided into 28 sales districts centered on sizeable metropolitan areas.

The Cleveland banking company, which is in the midst of a major cost- cutting program, confirmed that it's not leaving any major city in which it operates.

Analysts, who generally supported KeyCorp's cost-cutting plan in November, said the announcement is positive news.

"It's a minor milestone on the way to a more important objective," said analyst Michael Mayo of Lehman Brothers - to go to a national structure that costs less than the present "less-optimal legal structure."

"It increases the likelihood they'll have a consistent product and a consistent sales push," said Fred Cummings, an analyst at McDonald & Company Securities in Cleveland.

Mr. Cummings said the organization plan is like a national retail chain with district offices. "It's a rational way of doing it," he said. "It's consistent with how other national organizations structure their business."

KeyCorp has said it hopes to be among the first in the industry to organize under one legal structure, as allowed under the Riegle-Neal Interstate Banking Act of 1994. The company expects the charter consolidation and the overhaul of its sales structure be completed by the end of June.

Gary Allen, senior executive vice president and chief banking officer, will become chairman and chief executive of the resulting $63 billion-asset institution, to be named KeyBank.

In November the company said it would cut 10% of its work force and close or sell nearly one-fourth of its branches to $100 million from annual expects by yearend 1997. Stephen E. Wall, newly named president of KeyBank, said eliminating 11 bank charters would be part of the expense reduction but not a major contributor.

The reorganization shakes up KeyCorp's management group. The jobs of bank executives on the state and regional levels will be eliminated. The four executives who had headed KeyCorp's four banking regions are being reassigned or will retire.

KeyCorp officials declined to say how many management posts would be dropped with the reduction of charters, saying only that they would be "a portion" of the 2,700 to be eliminated in the cost-cutting push. The company has already said it would take a $100 million charge in the fourth quarter of 1996, half of it to cover severance and outplacement costs.

The 28 sales districts, which will be headed by presidents, are organized around major urban centers, including Cleveland, Albany, N.Y., Denver, and Seattle. The company said it wants to focus on the bigger cities in which it sells traditional consumer and investment products and lends to small and midsize businesses.

"That's where we've had the greatest amount of attention," said Mr. Wall, "and the greatest amount of success."

The sales district plan "confirms what they suggested earlier - that is, many of the divestitures would be in markets outside urban areas," said Sandra J. Flannigan, an analyst at Merrill Lynch & Co. "It does show greater focus."

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