KeyCorp's latest moves in its quest to become a national bank have won a hearty endorsement from Wall Street.

Analysts' consensus estimate for per-share earnings this year dipped slightly after last week's restructuring announcement, which included word of a charge to be taken in the fourth quarter.

But the consensus projection for next year rose 2.91% - the biggest increase last week among banking stocks tracked by First Call Corp., an affiliate of American Banker. The consensus estimate soared to $4.24 as analysts factored in new cost savings and an expanded stock buyback program.

"I'm a fan of what they're doing," said Dennis Shea, bank analyst with Morgan Stanley, who raised his 1997 earnings estimate to $4.25 per share from $4.10 in reaction to the restructuring announcement.

"We're finally seeing the synergies we hoped to see after the Society merger," he said, referring to KeyCorp's 1994 merger of equals with Society Corp.

The restructuring involves eliminating 10% of KeyCorp's jobs by the end of next year, closing branches, and converting the remaining ones to a single charter nationwide.

The Cleveland bank also disclosed plans to increase its stock buyback program by 12 million shares, a move that would cost about $650 million at the current price.

KeyCorp said it would take a $100 million charge against fourth-quarter earnings to pay for the restructuring. But in the long run, the moves will increase profits by $110 million per year and improve the efficiency ratio to 55% from 60%, the bank said.

Mr. Shea said the concrete statement of goals raised analysts expectations and boosted KeyCorp's stock price. Shares gained 7.2% last week.

"What they're doing makes a great deal of sense in the long-term," said Sandra Flannigan, bank analyst at Merrill Lynch & Co., who forecasts 1997 earnings of $4.15 per share.

Joe Duwan, a bank analyst at Keefe, Bruyette & Woods who upgraded KeyCorp stock to "attractive" from "market perform" after the restructuring announcement, is predicting 15% earnings growth in 1997.

"You are going to see better-than-average growth in this bank," said Mr. Duwan, who raised his 1997 earnings estimate to $4.30 per share from $4.20.

In trading Tuesday, KeyCorp gained tk to tk.

At the same time, shares of large banks generally lost ground as a marketwide selloff continued. The S&P bank index slipped tk%, while the S&P 500 fell tk.

Shares of Bank of New York rose $1, to $35TK, after Prudential Securities bank analyst Ruchi Madan initiated coverage with a "buy" rating.

Bank of New York got an additional boost from Merrill Lynch analyst Judah Kraushaar, who included it on a list of banking companies he estimates to be undervalued by as much as 30%. The other three banks on Mr. Kraushaar's list - Chase Manhattan Corp., Citicorp, and Republic New York Corp. - slipped with the market.

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