PNC’s $11.6 Billion BBVA deal to boost U.S. banking presence #SootinClaimon.Com

#SootinClaimon.Com : ขอบคุณแหล่งข้อมูล : หนังสือพิมพ์ The Nation.

PNC’s $11.6 Billion BBVA deal to boost U.S. banking presence

CorporateNov 16. 2020An American flag flies next to PNC Financial Services Group signage outside a bank branch in New York City on Jan. 11, 2020. MUST CREDIT: Bloomberg photo by Gabriela Bhaskar.
Photo by: Gabriela Bhaskar — BloombergAn American flag flies next to PNC Financial Services Group signage outside a bank branch in New York City on Jan. 11, 2020. MUST CREDIT: Bloomberg photo by Gabriela Bhaskar. Photo by: Gabriela Bhaskar — Bloomberg 

By Syndication Washington Post, Bloomberg · Scott Deveau, Hannah Levitt, Charlie Devereux · BUSINESS, US-GLOBAL-MARKETS 
PNC Financial Services Group agreed to buy Banco Bilbao Vizcaya Argentaria’s banking operations in the U.S. for $11.6 billion, vaulting past rivals to become the country’s largest regional bank.

The cash deal will boost PNC’s earnings by about 21% in 2022 and generate more than $900 million of cost savings, the bank said in a statement on Monday. The addition of BBVA branches across the southern and southwestern U.S. gives PNC a presence in 29 of the country’s 30 largest markets.

U.S. regional lenders are seeking to bulk up to compete with banking giants such as JPMorgan Chase and Bank of America, which are moving into new states and spending billions annually on digital offerings. Last year’s $28 billion combination of BB&T and SunTrust Banks was widely seen as the possible start of a new wave of mergers with the potential to build regional banks into national players.

Then the Covid-19 pandemic hit, bringing concerns about a potential wave of loan losses and the prospect of years of prolonged low interest rates weighing on revenue. PNC saw the turmoil as a possible opportunity, and has been on the prowl for a takeover candidate since raising $14 billion earlier this year through the sale of a stake in BlackRock.

Monday’s acquisition is the largest U.S. banking deal since the merger of BB&T and SunTrust. The deal will vault PNC in size past U.S. Bancorp and Truist Financial, which is the new name of the combined BB&T and SunTrust.

For BBVA, the deal allows it to exit a business which has weighed on group earnings while at the same time bolstering its firepower to pay dividends or make acquisitions as consolidation in Spanish banking takes hold.

BBVA took a 2.1 billion-euro ($2.5 billion) goodwill impairment charge on the business in the first quarter, which followed a writedown of 1.4 billion euros in the previous three-month period.

The all-cash deal values the business at 1.34 times its tangible book value as of September and will boost the bank’s capital ratio by about 300 basis points to a pro-forma CET1 ratio of 14.5%. The Spanish lender said the deal will give it the option of carrying out buybacks to boost a share price that has plunged by 36% this year.

“There may be value-creating opportunities in the markets where we have superior franchises,” BBVA Chairman Carlos Torres said on a conference call. “The buyback is very exciting and tremendously attractive, investing in organic growth as well. Those are the options to redeploy.”

BBVA USA has more than 600 branches in several states, including Texas, Florida and Alabama. About half of the business’s deposits are located in Texas, according to Bloomberg Intelligence. BBVA acquired the company in 2007, when it was called Compass Bancshares, according to its website.

The transaction excludes broker dealer BBVA Securities and the branch in New York, which will continue to provide corporate & investment banking services to large corporate and institutional clients. It also excludes the representative office in San Francisco and fintech investment fund Propel Venture Partners.

PNC, which is based in Pittsburgh, primarily has branches in the mid-Atlantic, southeast and midwest U.S.

The deal “would bolster PNC’s existing southeastern presence and jump-start the bank’s forays into Texas, where it currently employs a branch-lite model in Dallas and Houston,” Herman Chan, a Bloomberg Intelligence analyst, wrote in a note Sunday.

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