MADRID, Nov. 16, 2020 /PRNewswire/ -- BBVA has
agreed to sell to PNC its subsidiary in the U.S. for $11.6 billion (€9.7 billion1) in cash,
an amount that represents 19.7 times the unit's 2019
earnings2, and that is almost 50% of BBVA's current
market capitalization, creating significant value for shareholders.
The transaction will have a positive impact on BBVA's fully loaded
CET1 ratio of c.300 basis points, or €8.5 billion of CET1
generation.
"This is a very positive transaction for all sides. PNC has
recognized the great value of our unique client franchise and of
our great team in the US, who will be part of a leading financial
services group in the country," said BBVA Group executive chairman
Carlos Torres Vila. "The deal
enhances our already strong financial position. We will have ample
flexibility to profitably deploy capital in our markets
strengthening our long-term growth profile and supporting economies
in the recovery phase, and to increase distributions to
shareholders."
In the U.S., BBVA is a Sunbelt-based bank with more than
$100 billion in assets and 637
branches, with leading market shares in Texas, Alabama and Arizona. After the closing of the transaction,
PNC, based in Pittsburgh,
Pennsylvania, will become the country's fifth-largest bank
by assets. The transaction excludes the broker dealer (BBVA
Securities) and the branch in New
York, through which BBVA will continue to provide corporate
& investment banking services to its large corporate and
institutional clients. It also excludes the representative office
in San Francisco and the fintech
investment fund Propel Venture Partners.
"Our acquisition will accelerate our growth trajectory and drive
long-term shareholder value," said William
S. Demchak, PNC's chairman, president and chief executive
officer. "This transaction is an opportunity to navigate our future
from a position of strength, accelerating PNC's expansion while
drawing on our experience as a disciplined acquirer. We are excited
to bring our industry-leading technology and innovative products
and services to new markets and clients, leveraging our mutual
commitment to building diverse and high performing teams and
supporting the communities we serve."
The all-cash deal by PNC values the business sold at 19.7 times
its 2019 earnings and 1.34 times its tangible book value, as of
September, 2020. Additionally, the deal unlocks hidden value as the
price is more than 2.5 times the average valuation assigned by
analysts to the business (€3.8 billion), for a business that
represented less than 10%3 of FY2019 Group's net
attributable profit. Also the price represents almost 50% of BBVA's
current market capitalization4.
The transaction will have a positive impact on the fully loaded
CET1 ratio of c.300 basis points, or €8.5 billion of CET1
generation. Including this positive impact, the Group's pro-forma
fully loaded CET1 ratio would reach 14.5% as of September, 2020.
With the transaction, BBVA will have additional flexibility to
invest in its markets and increase distributions to shareholders,
with a sizeable buyback5 as an attractive option at
current share prices. The sale will generate a capital gain net of
taxes of approximately €580 million and BBVA Group's tangible book
value will increase by €1.4 billion.
The deal is expected to close in mid-2021 once the required
regulatory approvals have been obtained.
J.P. Morgan Securities plc served as exclusive financial advisor
to BBVA, and Sullivan & Cromwell LLP served as legal advisor.
Bank of America, Citi, Evercore and PNC Financial Institutions
Advisory acted as financial advisers to PNC and Wachtell, Lipton,
Rosen & Katz was legal counsel.
For more BBVA news visit, www.bbva.com.
BBVA Group
BBVA [NYSE: BBVA] is a customer-centric global financial services
group founded in 1857. The Group has a strong leadership position
in the Spanish market, is the largest financial institution in
Mexico, it has leading franchises
in South America and the Sunbelt
Region of the United States. It is
also the leading shareholder in Turkey's Garanti BBVA. Its purpose is to bring
the age of opportunities to everyone, based on our customers' real
needs: provide the best solutions, helping them make the best
financial decisions, through an easy and convenient experience. The
institution rests in solid values: Customer comes first, we think
big and we are one team. Its responsible banking model aspires to
achieve a more inclusive and sustainable society.
1 EUR / USD exchange rate of 1.20
2 Considers $587mn
2019FY results for the business sold
3 Excluding negative result of the Corporate
Center
4 As of November
13th
5 Any potential repurchase would at the earliest
take place after the expected close of the transaction in mid-2021.
Any proposed repurchase would (i) take into consideration share
prices, among other factors and (ii) require Shareholders and
Supervisory approvals and the lifting of the ECB's recommendation
on distributions to shareholders.
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SOURCE BBVA USA