- Activist investor HoldCo Asset Management is pressuring KeyCorp to halt bank acquisitions and redirect excess capital to share buybacks.
- CEO Chris Gorman has embraced a moratorium on depository M&A, significantly increased Q4 2025 repurchases, and signaled more buybacks in 2026 while calling the stock undervalued.
- HoldCo is also demanding Gorman’s removal and changes to KeyCorp’s board leadership, but the bank has not agreed to these governance proposals.
- Management now targets a long-term RoTCE of 16–19% versus ~12.5% today, betting on efficiency, organic growth, and technology investment to improve performance.
Read More
The public clash between KeyCorp and activist investor HoldCo Asset Management reflects growing pressure in the U.S. regional banking sector to shift capital allocation—from growth via M&A toward more restrained investments and shareholder returns.
Strategic Concessions: KeyCorp has agreed to adopt a moratorium on bank acquisitions—aligning with HoldCo’s principal demand—and recommitted to robust share buybacks. Gorman’s doubling of Q4 2025 buyback expectations and the promise of re-upping buyback authorization in 2026 mark concrete steps. However, governance calls such as removing senior leadership remain unmet. These partial alignments suggest KeyCorp is seeking to avoid a proxy contest while maintaining managerial stability.
Financial Performance & Valuation Pressures: Key’s current RoTCE of around 12.5% is viewed by management as inadequate, prompting a new target range of 16–19%. This suggests both recognition of underperformance and boardroom impetus to push efficiency and profitability higher. The bank also sees its stock as undervalued, using excess capital for buybacks—an approach that may prop up per‐share metrics while limiting risk exposure compared to acquisitive growth.
Governance, Leadership, and Board Risk: HoldCo’s demands include the removal of CEO Gorman and refusing to renominate the lead independent director, assuming both are viewed as impediments to change. KeyCorp has not publicly responded to these structural governance demands—likely reflecting Board resistance or unwillingness to relinquish control. These unresolved issues could become focal points in future investor activism or proxy fights. [1]
Open Questions & Risks:
- Will KeyCorp follow through fully on buybacks in 2026, or will macro headwinds force adjustments?
- How will KeyCorp articulate its non-bank M&A policy—are partnerships or fintech deals still possible?
- Will HoldCo escalate to a proxy contest if governance demands are ignored?
- Does KeyCorp’s balance sheet and expense base support its elevated RoTCE target, especially amidst rate volatility and credit cycles?
Supporting Notes
- HoldCo filed a $2.6 billion AUM presentation to KeyCorp’s independent directors titled “Read My Lips: No New Acquisitions,” disclosing it owns both common stock and debt of KeyCorp. [3]
- Chris Gorman stated KeyCorp is still digesting HoldCo’s presentation but is aligned with its “most important theme” of a moratorium on bank-depository acquisition activity. [2]
- KeyCorp is accelerating share repurchases: Q4 2025 buybacks raised to $200 million (double prior guidance), with $800 million remaining in the current plan and plans to reinstate buyback authority in 2026.
- CEO Gorman considered the bank’s ~12.5% RoTCE as “not acceptable” and introduced a new target range of 16-19% long-term.
- HoldCo’s demands beyond capital allocation: remove Gorman, do not renominate the lead independent director, address past acquisition decisions (e.g., First Niagara in 2016). KeyCorp has not confirmed compliance on governance changes. [1]
- KeyCorp’s shares rose ~4% on the day Gorman made alignment comments, reflecting market approval of the announced strategic conformance. [2]
Sources
- [1] www.prnewswire.com (PR Newswire) — Dec 5, 2025
- [2] www.reuters.com (Reuters) — Dec 9, 2025
- [3] www.americanbanker.com (American Banker) — Dec 9, 2025