PNC Is in Advanced Talks to Buy U.S. Arm of Spain's BBVA--Update
November 15 2020 - 8:12PM
Dow Jones News
By Cara Lombardo and Liz Hoffman
PNC Financial Services Group Inc. is in talks to buy the U.S.
arm of Spanish lender BBVA, according to people familiar with the
matter, in what would be one of the largest bank tie-ups since the
financial crisis.
A deal, which would likely be valued at more than $10 billion,
would create the nation's fifth largest retail bank, with more than
$550 billion of assets and branches up and down the eastern half of
the country. BBVA, which in 2007 bought Alabama-based Compass
Bancshares, has more than 600 branches and about $100 billion of
assets in the U.S.
The companies are discussing a combination that could be
announced by Monday, the people said, provided talks don't fall
apart at the last minute.
PNC, which has a market value of just over $50 billion, added to
its acquisition war chest earlier this year when it sold its stake
in BlackRock Inc. for $15 billion. BBVA's U.S. unit isn't publicly
traded.
Buying BBVA USA would help Pittsburgh-based PNC expand both its
consumer- and commercial-banking businesses. Closing branches in
regions like the southeastern U.S., where the two networks overlap,
could create opportunities to cut costs.
PNC Chief Executive William Demchak said in September that
extending the bank's national presence would be the "first, second
and third objective" of any deal.
Big bank takeovers have been rare since the 2008 crisis, with
few major players willing to test the political waters and wary of
new regulations now applied to larger banks. What is more, the old
logic of adding adjacent branch networks is less powerful now as
more banking moves online and consumers are less tethered to their
corner branch.
But regional lenders have been under pressure as big national
banks such as JPMorgan Chase & Co. and Bank of America Corp.
rake in deposits by attracting customers with flashy apps and
ubiquitous branch networks. Low interest rates have weighed on bank
profits, especially those of regional players that rely more on
traditional lending than their larger competitors.
In October, First Citizens BancShares Inc. agreed to buy CIT
Group Inc. for $2.2 billion, creating a regional bank with more
than $100 billion in assets. BB&T Corp. and SunTrust Banks Inc.
merged last year into Truist Financial Corp., which is the
eighth-largest U.S. lender, but would be kicked down a notch by a
combined PNC-BBVA.
And the sheer number of midsize regional banks in the U.S. --
there are at least 30 with between $50 billion and $250 billion of
assets -- has for years stoked expectations of additional
consolidation.
A deal would signal a retreat from the U.S. for BBVA, formally
called Banco Bilbao Vizcaya Argentaria, Spain's second-largest
lender with a major presence in Latin America too. It paid about
$10 billion in 2007 to acquire Compass, which gave it a
long-desired foothold in the U.S., but BBVA has at least twice
written down the value of the business and earlier this year warned
of another charge as the coronavirus pandemic tore through the U.S.
economy.
The bank, known within the industry for its deep digital
investments, has continued to expand its presence in growing U.S.
markets this year, including Texas.
Write to Cara Lombardo at cara.lombardo@wsj.com and Liz Hoffman
at liz.hoffman@wsj.com
(END) Dow Jones Newswires
November 15, 2020 19:57 ET (00:57 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
PNC Financial Services (NYSE:PNC)
Historical Stock Chart
From Mar 2024 to Apr 2024
PNC Financial Services (NYSE:PNC)
Historical Stock Chart
From Apr 2023 to Apr 2024