In a move to set up a national interstate banking strategy, Cleveland- based Keycorp is consolidating its Rocky Mountain banks into a regional group headquartered in Denver.
The pilot program signals a shift away from the independence the company has granted its affiliates in the past.
"This is, in some sense, an experiment of putting together four banks," said Keycorp executive vice president Edmund Keane, who will lead the Denver region. "What we try to do here can be emulated in other parts of the country."
The pilot program will affect banks in Colorado, Utah, Idaho, and Wyoming with a total of 143 offices and $5.2 billion of assets. Initially, the banks will operate as separate legal entities, though Key will ignore state lines where it can, Mr. Keane said.
While the effort is expected to eliminate duplication by creating a centralized back office in Denver, Mr. Keane said the program's financial implications are less important than the implied strategic shift.
The company's Albany, N.Y.-based predecessor had been known for giving a great deal of autonomy to banks it acquired. As a result, its affiliates were offering dozens of different products.
But that is now changing.
"Clearly, the management structure of the company is evolving and becoming more regionalized, more centralized," said Joe Duwan, a banking analyst at Keefe, Bruyette & Woods Inc.
Part of that evolution, though, is getting each bank's management to go along. This is no easy task, Mr. Keane said.
"People really don't like change, and this is going to change the way we do business," he said. "For the CEOs and boards at each of these banks to begin thinking regionally is going to be a big change."
Placing the regional headquarters in Denver is also seen as a sign of Keycorp's desire to see its Colorado operations grow.
"Denver is clearly the economic center of the Rocky Mountain states," Mr. Duwan said. "To me, this signals that they would like to do more in Denver."
But opportunities for expansion may be hard to come by. The five largest bank companies in the state - Keycorp, First Interstate Bancorp, Norwest Corp., First Bank System Inc., and Banc One Corp. - already control a combined 68% of the Colorado market.
Keycorp recently completed acquiring one of the few plums left in the state, Denver-based Omnibancorp, a $500 million-asset bank with 18 offices.
The large presence of out-of-state banks in Colorado has already created a political backlash.
The Independent Bankers Association of Colorado and the Colorado Bankers Association lent support to a legislative measure designed to prevent banks from branching into or out of the state. That measure was vetoed Monday by Gov. Roy Romer.
"Opt-out had us nervous," Mr. Keane said. "I respect the governor for taking the politically difficult position of vetoing the bill."
