PNC set to close deal for RBC’s US retail unit

PNC has beaten off interest from BB&T to snap up the loss-making US-based retail banking unit of Royal Bank of Canada (RBC) in a deal worth around $3.5bn. In addition to acquiring $19bn in deposits and $16bn in loans, the deal will augment PNCs existing branch network of around 2,500 units by around 430 outlets. With a combined network of almost 3,000 outlets once the deal is closed, PNCs network will almost match that of US Bank, the fourth-largest US bank by branches with 3,082 outlets.

PNC has beaten off interest from BB&T
to snap up the loss-making US-based retail banking unit of Royal
Bank of Canada (RBC) in a deal worth around $3.5bn.

In addition to acquiring $19bn in deposits
and $16bn in loans, the deal will augment PNC’s existing branch
network of around 2,500 units by around 430 outlets.

With a combined network of almost 3,000
outlets once the deal is closed, PNC’s network will almost match
that of US Bank, the fourth-largest US bank by branches with 3,082
outlets.

RBC is estimated to have invested around
C$5bn invested in building up its US-retail division.

RBC’s international
division reported a loss of C$317m ($319.5m) in fiscal 2010,
compared with a loss of C$1.45bn in fiscal 2009.

Although the
unit swung back into the black in the three month period to 31
January – it posted a net income of C$24m – the profit was derived
from RBC’s business unit in the Caribbean and its RBC Dexia
unit.

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In January, Gordon Nixon, CEO
of RBC told an investor conference that the “jury is out” on the
future of RBC’s retail unit in the US.

“At this point in the
cycle, I am not sure what we would like to do in [the US] in the
longer term” said Nixon.

In April, Canadian press
reported that RBC had engaged JPMorgan Chase to explore a
possible sale of the US division.