HoldCo is pressing KeyCorp to overhaul its leadership and strategy, warning it may pursue a proxy fight or push for a sale if the board does not act.
- HoldCo urged KeyCorp to stop acquisitions and replace its CEO while accelerating share buybacks.
- The fund criticized past strategic decisions and pushed for board changes tied to earlier deals.
- It warned it could launch a proxy fight or advocate a sale to a larger bank if the board resists.
KeyCorp (KEY) became the latest U.S. regional lender to come under direct fire from HoldCo Asset Management on Friday, as the Florida-based hedge fund urged the bank to swear off acquisitions, replace CEO Chris Gorman and funnel all excess capital into share buybacks.
HoldCo said funds it manages own about 7.5 million KeyCorp shares worth more than $140 million and laid out its case in a presentation to the bank’s independent directors titled “Read My Lips: No New Acquisitions.”
Shares of KEY closed up 0.8% in the regular session and remained nearly flat in after-hours trading at the time of writing.
Demands: No Deals, More Buybacks, Board Changes
In its presentation, HoldCo called on the board to adopt a formal “no acquisitions” policy for future bank deals and to commit that any capital remaining after funding organic growth and paying the regular dividend be used for stock repurchases.
The fund said it wants Gorman removed as chairman and CEO and urged KeyCorp not to re-nominate Lead Independent Director Alexander Cutler or other directors who approved earlier strategic moves such as the First Niagara acquisition. HoldCo also proposed an independent capital-allocation committee that would exclude representatives of Scotiabank, which holds a 14.9% stake in KeyCorp following a $2.8 billion strategic investment.
The presentation criticized KeyCorp’s pre-2023 interest-rate positioning, securities and swap decisions, and past use of capital, arguing those choices contributed to balance-sheet stress, ratings downgrades and shareholder dilution that was later addressed through the Scotiabank deal.
Threat Of Proxy Fight
HoldCo, which manages about $2.6 billion and was founded by Vik Ghei and Misha Zaitzef, has been active across the regional banking sector. The firm pushed for a sale of Comerica, which in October agreed to be acquired by Fifth Third Bancorp in a $10.9 billion transaction, and has pressed for changes at several other U.S. regional lenders, with two banks last month avoiding proxy fights after engaging with the fund.
At KeyCorp, HoldCo said it is considering a near-term proxy contest and is prepared to push for a sale of the Cleveland-based bank to a stronger buyer if the board does not shift course. The fund said it is “evaluating other remedies available to us, including a near-term proxy contest and/or pressing for a sale of KEY to a stronger buyer, such as PNC, Wells Fargo or certain Canadian banks.”
Stocktwits Users Draw Muted Mood
On Stocktwits, retail sentiment for KEY was ‘neutral’ amid ‘normal’ message volume.
KEY’s stock has risen 18% so far in 2025.
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