First Niagara Financial Group will ask federal regulators to convert its savings bank into a commercial bank, giving up a thrift charter that it has held for 140 years.

The Buffalo-based company said Thursday that it will request the new charter from the Office of the Comptroller of the Currency, the Treasury Department division that regulates commercial banks.

Converting First Niagara Bank from a savings into a commercial institution will give First Niagara more flexibility “to serve the diverse financial needs of its growing customer base,” the bank said in a news release.

Banks also have less restrictions on their lending activities than thrifts, which are required to hold a certain portion of their loans in mortgages. And the switch formalizes a transformation that has already taken place in its business over more than 10 years, as the bank has sought to become more like a commercial bank in what it offers and how it functions.

“Given today’s regulatory and legislative transition and turmoil, it’s clear to us we need to align who we are with what we are,” First Niagara President and Chief Executive Officer John R. Koelmel said, referring to proposed legislation in Congress that would revamp financial regulation. “We’ve been a commercial bank operating in form as a thrift.”

But the change won’t affect employees’ day-to-day responsibilities or interactions with customers, or First Niagara’s plans to buy Harleysville National Corp. in suburban Philadelphia in the first quarter of 2010.

The move follows the application last week by the publicly traded parent company to the Federal Reserve Board to become a bank holding company. First Niagara Financial is now a thrift holding company regulated by the Office of Thrift Supervision and can only own other savings banks. By contrast, bank holding companies have more authority. The new status would allow First Niagara to continue expanding through acquisitions of commercial and savings banks, giving it flexibility in how it completes deals.

Under its current setup, First Niagara must merge an acquired commercial bank like Harleysville into its thrift subsidiary immediately upon closing. As a bank holding company, though, it could own separate banks until it’s ready to combine them. That could help as it buys more and larger banks that are more complicated to integrate, Koelmel said.

“It’s at least a real possibility that we will have multiple banking subsidiaries from time to time,” Koelmel said.

The company already owns a separate entity called First Niagara Commercial Bank, which accepts municipal deposits. But that unit, acquired as part of the Hudson River Bancorp purchase in January 2005 and now based in Lockport, does not have a true commercial bank charter and cannot make commercial loans, Koelmel said.

Upon approval, First Niagara Financial would be regulated by the Federal Reserve, while First Niagara Bank would be under the currency controller’s office. The Office of Thrift Supervision now regulates both.