PNC Financial Services (PNC) - Get Report will acquire the U.S. banking operations of Spain's BBVA (BBVA) - Get Report for $11.6 billion in cash, making it the biggest regional bank by assets under management in the U.S.
Pittsburgh-based PNC announced Monday that it has agreed to buy Banco Bilbao Vizcaya Argentaria SA’s banking operations with cash on hand in a fixed price structure. It is expected to boost earnings by about 21% in 2022.
The deal creates the fifth-largest U.S. retail bank with more than $550 billion in assets and makes PNC the largest regional lender in the country, an area of banking that has seen intense growth via mergers and acquisitions but also intense competition.
Indeed, big players like JPMorgan Chase (JPM) - Get Report and Bank of America (BAC) - Get Report already had been expanding their regional presence before the pandemic hit, while mergers like BB&T and SunTrust Banks' $28 billion deal last year were expected to accelerate consolidation in the regional banking world.
That was put on hold when the pandemic struck amid initial concerns over loan losses, though record amounts of stimulus and federal backstopping have helped grease the banking system, in turn easing concerns about potential defaults and bank failures.
PNC primarily has branches in the mid-Atlantic, southeast and midwest U.S., while BBVA's U.S. operations are mostly in Texas, Florida and Alabama. BBVA acquired the company in 2007, when it was called Compass Bancshares.
The transaction excludes broker-dealer BBVA Securities and BBVA's New York branch. It also excludes a representative office in San Francisco and fintech investment fund Propel Venture Partners.
BBVA’s U.S. business took a €2.1 billion ($2.5 billion) goodwill impairment charge in the first quarter of 2020, which followed a write-down of €1.4 billion in the fourth quarter of 2019.
PNC shares were up 2.06% at $125.31 in trading on Monday. Shares of BBVA were up more than 15% at €3.68 in Madrid.