KeyCorp chairman and chief executive officer Robert W. Gillespie is keen on acquisitions of almost any kind.

In an interview last week he spoke mostly about diversifying away from traditional banking. He stopped just short of swearing off bank acquisitions.

He said he would be interested in buying a bank only if it would help KeyCorp build scale in a high-profit specialty such as small-business lending, private banking for the affluent, and business leasing.

KeyCorp is also interested in insurance, securities, and consumer finance businesses, Mr. Gillespie said.

"We are not interested in acquiring banks as banks," he stated. "We are interested in businesses and some markets we're not in."

The $70 billion-asset KeyCorp, the 14th-largest bank holding company, has not made any bank acquisitions in more than two years.

"The consolidation of the banking industry is in its last gasp," said Mr. Gillespie. "The story today is the consolidation of the financial services industry."

Indeed, KeyCorp's banking side has been in a divestiture mode for the past year. Last year it announced it would close or sell 280 branches by the end of this year. Since November, the company has agreed to buy the home equity lender Champion Mortgage Co. (see article above) for $200 million and has bought $1.1 billion-asset Leasetec Corp. of Boulder, Colo.

As for other acquisitions, Mr. Gillespie noted that both the securities and insurance businesses are important to KeyCorp's growth.

The company's first large expansion of its asset management business was the acquisition of Spears, Benzak, Salomon of New York in 1995. KeyCorp employs 260 brokers in its securities business, which has $6.5 billion in retail brokerage assets. Assets under management, including institutional, total $51 billion.

Insurance is an area of future growth for KeyCorp, Mr. Gillespie said, and one in which the company wants to build expertise. "We know a lot about our customer base," Mr. Gillespie said. "But we don't know enough about insurance now."

That is why the company hired Roger E. Dunker as president and chief executive officer of KeyCorp Insurance Management Group. Mr. Dunker, a 25- year insurance industry veteran, was most recently president of Life Partners Group, a Denver-based life insurer.

KeyCorp has also gone the partnership route. In investments, it has an alliance with Charles Schwab & Co. to sell mutual funds through KeyCorp branches. It also has an alliance with First Union Corp. to cross-sell each other's mutual funds. Mr. Gillespie said he would like to expand both the insurance and investment businesses through acquisitions or strategic alliances.

Still, Mr. Gillespie said he believes the company has enough size and recent initiatives to grow. KeyCorp has seven million customers, and Mr. Gillespie said he thinks he can double that through direct marketing efforts.

Mr. Gillespie also said there were possibilities for expansion at New Jersey-based Champion, which is in five eastern states. Mr. Gillespie said his plan is to take it nationwide after the deal closes next month.

Mr. Gillespie is interested in acquiring other subprime lenders - but not troubled companies. Noting the recent "implosion" among subprime auto lenders, he said he is more likely to buy a company for its expertise than simply added business.

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