Banking On Change
June 1 1997 by Judith Rehak
What’s Charles Schwab, the discount brokerage king, doing on the cover of KeyCorp’s 1996 annual report? For that matter, why was an unshaven Anthony Edwards, star of ER, one of television’s hottest programs, featured on last year’s cover?
They both underscore KeyCorp Chairman and CEO Robert Gillespie’s determination to build the nation’s 14th largest commercial bank into a major financial services player. Edwards’s role as the bank’s celebrity spokesperson contributes to Gillespie’s vision of a KeyCorp that markets products like a retailer. In the case of Schwab, a powerhouse rival in the intensely competitive financial services arena is now a partner. In the latest of a series of such alliances, KeyCorp has begun offering its customers more than 650 no-load funds from Schwab’s wildly popular OneSource fund supermarket.
Non-bank financial players continue to erode bank market share by utilizing technology to offer services at lower costs and greater profit. So the 53-year-old Gillespie is coupling innovative marketing with a strong focus on technology in his drive to position KeyCorp as a leader in what many have termed the “New Age of Banking.”
Stretching across 14 northern states, the $67 billion-asset Key is the result of a 1994 merger between KeyCorp of Albany, NY, and
But more than a few industry experts say that banks who plan to be around in 10 years have to start doing things unconventionally. Heeding the call last November, KeyCorp announced a dramatic $100 million restructuring to close or sell 280 small-town branches by September, eliminating 2,700 jobs, or about 10 percent of its work force.
Timed for the launch of interstate banking in mid-’97, the move positions KeyCorp to focus on its more profitable urban operations across the country. Gillespie figures the cost-cutting effort will boost earnings per share growth above the target 12 percent, and lower expenses from 60 to 55 percent of 1997 revenue.
And none too soon, say some analysts, who, disappointed with Key’s slow growth, have named it as a takeover target. But others disagree. “Wall Street has been a little impatient,” says Joseph Duwan of Keefe Bruyette & Woods, “but I have to compliment [KeyCorp] on what it’s trying to do. We’re just beginning to see the results.”
Gillespie concurs. As for a possible takeover? “Our view is that we’re large enough to do the things we want to do,” he says, “and if we can perform at the level I’ve described, I don’t think we’ll have to worry about that possibility.”
Chairman and CEO
Family: Wife, Ann; two daughters
Car: White Chevy Suburban Tahoe. Greatest influence: “My hero is Winston Churchill. I go to Chartwell [Churchill's home] like a pilgrimage.”