Key Bank of New York says it has found a way to reduce the outflow of customers that results from branch closings.

The Keycorp subsidiary, which has 330 branches across the Empire State, has been holding public meetings at the 12 it is thinking about closing.

The idea is to offer the public a chance to voice concerns, particularly in communities where Key has only one office. The bank also uses the meetings to explain its strategy to customers.

"It gives the bank a great opportunity to defuse some negative opinions" aroused by the question of closings, said spokesman Herbert Knoll.

More often than not the branch is closed despite what customers say in such a meeting, Mr. Knoll said. But the meetings help in retaining customers, he said, since bank officials can talk up alternative delivery systems such as telephone banking and direct deposit.

Though banks don't publish figures about customer defections when branches are consolidated, bankers acknowledge they're a serious problem.

Key Bank of New York began hosting the hearings four years ago, when it embarked on an acquisition spree. The bank purchased seven competitors in 1991-94.

The New York subsidiary, with $14.8 billion in assets and $11.3 billion in deposits, has a greater-than-average need to soothe upset customers. Its headquarters are in Albany, Keycorp's home base before its merger last March with Society Corp. The new company makes its home in Cleveland, a location more central to its 1,300 offices in 25 states.

Keycorp thus became the second major New York bank holding company in five years to move its headquarters out of state. Albany-based Norstar Bancorp was acquired in 1989 by Fleet Financial Group of Providence, R.I.

Keycorp acquired 12 Vermont offices in January and is awaiting the closing of a deal that would give it about 100 offices in Maine.

Bill Murschel, a spokesman for Keycorp in Cleveland, said that public meetings are not company policy, but that some affiliates use this as a way of assessing community needs.

On three occasions in the past four years, customers persuaded Key Bank of New York to keep branches open, Mr. Knoll said. "It became less a matter of economics than it did the impact on the community," he added. Two of those branches are in Albany, the third in a Buffalo suburb.

The bank advertises the public hearings in local newspapers, and invites those who can't attend to fill out a card and mail it in.

Sometimes hundreds will show up at the meeting, Mr. Knoll said. Sometimes virtually no one attends.

In a recent case, Mr. Knoll said, the owner of a Newburgh shoe store presented a 500-signature petition urging that the local branch be kept open. That branch's fate is yet to be decided.

Mr. Knoll said the bank did manage to convince at least one important local official of the need to consolidate. After a meeting in Niagara Falls, according to the Key Bank spokesman, Mayor Jacob Palillo said publicly that he understood the bank's decision to close one of its branches there.

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