Dismissing talk that KeyCorp might be contemplating a merger, chairman and chief executive Robert W. Gillespie told shareholders Thursday that the company plans to be busy cutting costs for the next two years.

Mr. Gillespie said that within the next two quarters the company would announce a program designed to reduce its ratio of expenses to revenues to 53% by yearend 2001, from 60%.

KeyCorp has been rumored to be negotiating to sell out to its crosstown rival, National City Corp. But Mr. Gillespie peppered his presentation, and his remarks to reporters afterward, with hints that he would resist such a deal and that he sees KeyCorp remaining independent.

"One path being followed by some institutions is simply to get larger," he said in a prepared statement. "The other path is to diversify into new, related businesses, creating more broadly based financial services companies. We have followed the latter approach."

He also displayed a chart showing the revenues of some KeyCorp competitors, including National City, "hitting the wall."

"I believe any merger, large or small, has the potential to be disruptive," Mr. Gillespie said, adding that it is particularly important to address year-2000 computer concerns without distraction.

Mr. Gillespie declined to say how many of KeyCorp's 25,000 jobs are jeopardized by the cost-cutting program but said it would mean "some fewer jobs."

He also said the company is considering selling all or part of its $1.4 billion credit card portfolio and its $4 billion indirect auto-loan portfolio. "Those operations are undergoing extreme scrutiny in the company to see if they have the long-term capability to meet our growth rates," he said.

Loans to auto dealers and an auto leasing portfolio would not be sold because those businesses meet profitability goals, he said.

One analyst said the restructuring could be an attempt to hold unhappy investors at bay.

"Shareholders are restless and demanding an acceleration of the ramp up in financial performance that's been promised," said Joseph Duwan, an analyst at Keefe, Bruyette & Woods Inc.

KeyCorp shares fell 3.8% to $34.625.

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