PNC Financial Services Group, Inc., and Royal Bank of Canada announced an agreement on Monday for PNC to acquire RBC Bank, the U.S. retail banking subsidiary of Royal Bank of Canada, and its credit card assets for $3.45 billion.
Buying the Raleigh, N.C.-based RBC Bank, worth approximately $25 billion in assets, will provide PNC a large boost in the southeast, ChinaPost.com reports. The deal includes $165 million in credit card assets.
The acquisition adds RBC Bank’s 424 branches in North Carolina, Florida, Alabama, Virginia and South Carolina to PNC’s existing network. PNC will have 2,870 branches, ranking it fifth among U.S. banks.
PNC will also acquire approximately $19 billion of deposits and $16 billion of loans in the deal based on RBC Bank balances as of April 30, 2011.
"The addition of RBC Bank provides PNC a great opportunity to enter attractive southeast markets in a way that will create value for our shareholders," James E. Rohr, PNC's chairman and chief executive officer, said, ChinaPost.com reports. “This transaction represents an outstanding growth opportunity for PNC."
The purchase price is currently estimated at approximately 97 percent of RBC Bank's tangible book value. PNC predicts that the deal will increase earnings by 2013, according to ChinaPost.com.
The transaction, which has been approved by the boards of directors of both companies, is expected to close in March 2012.