Robert W. Gillespie, chairman and chief executive officer of Cleveland-based KeyCorp, indicated to analysts at a meeting earlier this week that if the company's new restructuring program failed to deliver stronger earnings, he would consider selling the company.

The analysts meeting, which took place in New York, was the first time Mr. Gillespie, a staunch defender of KeyCorp's independence, alluded publicly to the idea of selling.

The impression left by Mr. Gillespie and Henry Meyer, president and chief operating officer, was: "If the restructuring program doesn't increase fee-based revenue and if the momentum is not kept going, KeyCorp might consider selling," said Stephen Wharton, a buy-side analyst with Loomis Sayles & Co. who participated in the conference. Loomis Sayles, Boston, owns $100 million of KeyCorp shares.

In the past, Mr. Gillespie often told the press and others that KeyCorp is fiercely independent.

A KeyCorp spokesman declined to comment on the analysts meeting.

The company called the analyst meeting to talk about its restructuring program and its languishing price/earnings ratio, which is one of the lowest of the top 50 banks. KeyCorp is selling about 10 times year-2000 earnings.

The value of the $83 billion-asset bank's stock has suffered badly, falling 30.5% from its high in May. The stock closed Thursday at $25.25, down from the May high of $36.9375. Analysts said the decline reflected KeyCorp's track record of missing Wall Street's earnings expectations. KeyCorp missed analysts' earnings forecast for the third quarter by a penny. Earnings were 62 cents.

Analysts who attended the meeting said Mr. Gillespie acknowledged that KeyCorp has disappointed investors, but argued that the bank deserved a higher price/earnings multiple than other banks that have had much more serious problems.

Under its restructuring program, which was announced last week, KeyCorp would lay off roughly 3,000 employees, or 11% of its workforce, by the end of 2000; sell its credit card unit; and consolidate its back office operations. Mr. Gillespie estimated that those actions would improve pre-tax earnings by more than $170 million within two years.

Mr. Gillespie also said KeyCorp would increase its retail banking earnings by moving into higher growth cities. He added that the company would slowly reduce the volume of subprime loans securitized because of the volatility of that market.

Several of the analysts who met with KeyCorp said the meeting was "positive," but many said that the company clearly had an uphill battle.

"We believe the company can deliver the expense-savings goal detailed in its restructuring," said Michael Plodwick, a Lehman Brothers bank analyst, in a note to clients. "However, we remain somewhat dubious that the company can simultaneously reduce its workforce by approximately 11% while maintaining top-line revenue growth."

Mr. Plodwick also pointed out that several banks were taken over after having announced restructuring. CoreStates, which was taken over by First Union Corp. in 1998, had announced a major restructuring plan in 1995.

The old Firstar announced a restructuring program in 1996, and later merged with Star Banc Corp. in 1998. Star adopted the Firstar name. Mercantile Bancorp of St. Louis announced a restructuring in January and sold out to Firstar in September.

According to a Keefe, Bruyette & Woods Inc. study, Signet Banking announced a restructuring program in 1997 and announced its sale to First Union Corp. a month later. First Interstate announced a restructuring in September, 1994, and sold out to Wells Fargo & Co. less than two years later. The old U.S. Bancorp announced a restructuring program in March 1994 and agreed to sell out to First Bank Systems three years later. First Bank Systems took U.S. Bancorp's name.

"We are not rooting against them," said Mr. Plodwick. "Maybe the company can pull it off. But history suggests otherwise."

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