CLEVELAND - Robert Gillespie, a principal negotiator in the deal to merge Keycorp and Society Corp.. said Wednesday it will be at least six months before he can estimate potential revenue benefits from the merger.
Separately, another officer of Society said it is not entirely certain that the merged bank will operate under the Keycorp name.
"For better or worse, we haven't been able to scope out the markets and determine how quickly we can add revenues," Mr. Gillespie said in an interview Wednesday.
Revenue growth has been billed as the key rationale for the merger.
The Keycorp-Society union, unlike in-market mergers, is not being promoted for its cost-saving potential. Both banks already are efficient and their headquarters are so distant - in Albany, New York, and Cleveland - that major cuts in overhead are not foreseen.
That has left Mr. Gillespie in the awkward position of lacking hard facts to back up the revenue argument that is the main rationale for the merger.
That, in turn, has been a sore point among analysis and investors. The stock of Keycorp fell 6.6% on the the first two days of trading following the merger announcement Monday, while Society. lost about 5.5% of its value. Keycorp bounced back a bit on Wednesday, trading up 87.5 cents to $36.875 a share in mid-afternoon trading. Society was unchanged at $30.75 a share.
Sales by Speculators
In the interview, Mr. Gillespie said that Wall Street's skeptical reaction was understandable because a long-distance "merger of equals" has not been tried before. But he contended that the market skepticism is overdone, saving that much of the falloff reflected sales by speculators who were betting on an outright takeover of one or both of the companies.
He also maintained that investors are underestimating some important strengths of the new company. Society's trust operations and Keycorp's mortgage operations will be major weapons in the increasingly competitive battle with competitors from outside, the banking industry, he said.
"By 1995, the combined entity will be growing revenues faster than either of the predecessor companies could do on their own," Mr. Gillespie said.
He and some other executives also provided some additional information about the deal, and qualified some statements.
The proposed merger will trigger "change in control" provisions at both companies, Mr. Gillespie acknowledged, which will enable top executives to leave early with very attractive severance packages.
However, he expressed confidence that there would not be a debilitating exodus of top talent.
No Big Purchases
Separately, he modified remarks made on Monday by Keycorp chairman Victor Riley, who had told analysts that his bank could announce another big acquisition even before the Society deal closes.
"If we said that it was a mistake," Mr. Gillespie told investors at a conference in Cleveland on Tuesday sponsored by McDonald & Co. The only deals that might occur would be "fillins" in existing markets that were pending before the Society-Keycorp deal was announced, he said.
However, Mr. Gillespie echoed earlier remarks by Mr. Riley that the merged company will eventually seek further acquisitions - most likely in the broad geographic belt between Chicago and Denver.
Name May Change
Separately, Henry Meyer, the president and chief operating officer of Society, cautioned that the decision to adopt Keycorp as the combined company's new name is not entirely set in stone. Certain legal technicalities remain to be cleared up on the name, he said.
In the event the company cannot use the name, it probably could adopt the moniker of Key Bancs Inc., he said. He added that the Cleveland-based lead bank of the merged entity would continue to operate under the name Society National Bank.
Mr. Meyer said it was not yet clear whether outlying Society operations would be placed under the Keycorp logo.
The principal risk looming in the Keycorp merger, according to Mr. Gillespie, is that the roughly 34,000 employees of the combined company will not rally behind the transaction.
"If we can get all those people to understand. the deal is a lay-up." he said. emphasizing that employee communication is a top priority.
"If not, we've got a problem."
Relocation to Cleveland
In the early going. the union of Keycorp and Society will occur at the holding company level, Mr. Gillespie said. Virtually all of the top officers of Keycorp are expected to relocate to Cleveland, including Mr. Riley.
Mr. Meyer said it is not yet clear what management combinations will be brought about between the lead banks of the two companies. But he agreed that the merger cannot achieve its full potential until the banking operations of the companies are melded.
Mr. Gillespie echoed earlier remarks by Mr. Riley that the merged company will eventually seek further acquisitions - most likely in the broad geographic belt between Chicago and Denver.