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

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.

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.