(Reuters) – PNC Financial Services Group Inc PNC. N said on Monday that she would buy U. s. Business of Spanish Lender BBVA BBVA. MC for $ 11. 6 billion in cash, boosting U power. s. The banking sector.
It is the second largest U. s. Banking deal since the 2008 financial crisis and creates yo. s. A bank with approximately $ 560 billion in assets and a presence in twenty states.
The move confirms that easing financial regulations and cutting corporate taxes under President Donald Trump encouraged regional lenders to pursue expansion by making deals, as they compete with bigger players such as JPMorgan Chase & Co JPM. N and Wells Fargo & Co WFC. N.
PNC and BBVA have each had talks about a deal over the past few weeks, and have decided to press to follow through on the November results.. 3 yo. s. Presidential elections because they believe the regulatory environment will not change with Democrat Joe Biden as president and the Republicans are likely to take control of the United States government. . s. Sources told Reuters in the Senate.
PNC said it expects the deal, which was approved by both companies’ boards of directors, to add nearly 21% to its profits in 2022..
The deal comes about six months after PNC sold it 22. 4% of the shares of mutual fund giant BlackRock, BLK. N for $ 14. 2 billion. PNC recorded an after-tax gain of $ 4. Sources said it will use $ 3 billion in the sale, which it will use to fund the deal with BBVA as it seeks to expand its presence in the southwestern United States.. .
The deal represents a $ 9 BBVA break-up. 6 billion acquisition in 2007 of Compass Bancshares Inc, which turned it into a U. s. Company. BBVA decided to withdraw from the U. s. The sources said that the market, after its poor performance, affected its stock. Inventory is down 36% year-to-date.
BBVA said it will keep some of its US business such as brokerage and its stake in Propel Venture Partners and will continue to handle some of its wholesale banking operations from its New York office.
The deal, expected to close in mid-2021, would mean 300 basis points for a Level 1 common stock ratio and € 580 million ($ 687).. 18 million) positive impact on its net profit, BBVA said.
US deal activity. s. The banking sector weakened after the financial crisis, as stricter rules were imposed on lenders with more than $ 50 billion in assets, and regulatory agencies prevented banks with compliance problems from expanding.
Changes in U. s. However, tax laws under Trump have lowered corporate taxes, freeing up capital that banks can use to fund deals.. Regulators have begun approving more regional bank mergers, such as Cadence Bancorp’s CADE. N merges with State Bank Financial Corporation and SNV of Synovus Financial Corp.. . N Acquisition of FCB Financial Holdings.
The biggest banking deal since the 2008 financial crisis was the creation of Truist Financial Corp TFC. N last year through U. s. Regional lender BB&T Corp acquired $ 28 billion from SunTrust Banks Inc.
Another trigger for deals has been this year’s COVID-19 pandemic, which has pushed more customers to banking online and prompted lenders to review their physical locations in an effort to cut costs..
PNC, which has a market value of $ 52 billion, has traditionally been focused on the Mid-Atlantic, Midwest, and Southeastern United States. S areas. . The deal gives her a greater presence in Texas and allows her to enter other states such as Arizona and New Mexico.
Investors are running out of patience with BBVA’s efforts to remedy its poor U-performance. s. After the Spanish lender took away $ 1. 5 billion of its profits were written off for the fourth quarter of 2019, blaming lower interest rates and slower growth..
BBVA CEO Onur Genç recently changed course, stating that he is open to corporate sales if they create shareholder value.
Bank of America, Citi, Evercore and PNC Financial Institutions Advisory have worked as financial advisors to PNC, Wachtell, Lipton and Rosen & Katz was her legal advisor.
ing. s. Morgan Securities PLC represented BBVA as financial advisor and Sullivan & Cromwell LLP was its legal advisor.
Reported by Greg Romeliotis from New York and Chobham Kalia in Bengaluru; Written by David French Edited by Sherry Jacob Phillips, Muralekumar Anantharaman, and Anil de Silva
All quotes are at least 15 minutes late. See here for a complete list of exchanges and delays.
PNC Financial Services, Banco Bilbao Vizcaya Argentaria, BBVA USA, PNC Bank, Finance
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