PNC Financial Services Group Inc. (PNC) confirmed its
acquisition of Royal Bank of Canada's (RY, RY.T) U.S. retail
banking unit for $3.45 billion.
The Wall Street Journal reported Monday that RBC, which forayed
into the U.S. market in 2001 with the $2.2 billion purchase of
North Carolina-based Centura Bank, is exiting from a business that
has lost money for several straight quarters, due in part to the
collapse of the U.S. real-estate market.
Pittsburgh-based PNC beat out rival regional bank BB&T Corp.
(BBT) for the RBC operations.
RBC said it is also selling PNC related credit-card assets for
$165 million.
RBC expects to book a sale-related loss of C$1.6 billion,
including an estimated goodwill write off of C$1.3 billion, in the
current quarter.
PNC expects to incur merger and integration costs of about $322
million, while reducing the noninterest expenses of RBC Bank (USA)
by $230 million, or 27%, through operational and administrative
efficiency improvements. PNC expects the deal to increase its
earnings by the end of 2013.
The deal should close in March of 2012.
The deal marks the second big banking transaction in days as
financial institutions seek to shed businesses at the behest of
regulators or sell unprofitable or peripheral units. Last week,
U.S. bank Capital One Financial Corp. struck a $9 billion deal to
buy the U.S. online bank of Dutch financial giant ING Groep NV. ING
was required to sell the business as a condition of receiving
government money during the crisis.
PNC shares closed at $57.79 and RBC closed at $44.54 on Friday.
Both stocks were inactive premarket.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283;
melodie.warner@dowjones.com