Cuomo is requesting to reject the $4.1bn deal as he is concerned that the acquisition would reduce competition in the retail banking sector.
Last year, American bank-based financial services company KeyCorp has reached an agreement to acquire First Niagara Financial Group.
Based in New York, First Niagara is a multi-state community-oriented bank with total assets worth of $39bn and $29bn in deposits and 394 banking offices in New York, Pennsylvania, Connecticut and Massachusetts.
Cuomo said: "The proposed acquisition of First Niagara by Key Bank would have a devastating impact on consumers and businesses in Upstate New York.
"This proposal would reduce retail banking competition, limit consumer access and convenience, and ultimately eliminate jobs throughout the region."
The consolidation of First Niagara and KeyCorp operations will result in branch closures in the area. Consequently, consumers will face limitations on branch access.
Erie County Executive Mark Poloncarz and Congressman Brian Higgins are also opposing the deal.
Cuomo also threatened to consider legal redress with the courts to protect the rights of New York’s residents, if the acquisition application is not blocked.
If the deal goes ahead, the combined bank is expected to become the 13th largest commercial bank headquartered in the US with an ability to serve three million clients across diverse markets in the Northeast, Mid-Atlantic, Midwest and Pacific Northwest.
It will have approximately $99.8bn in deposits, $83.6bn in loans and 1,366 branches across 15 states.
Image: Andrew M. Cuomo is the 56th Governor of New York. Photo: courtesy of Pat Arnow / Wikipedia.
