Each week, RBI’s journalists select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value, or the highest profile. But we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself, and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.
The deal
Banc of California has agreed a $1.1bn deal to acquire PacWest, one of the US lenders under the most pressure since the banking crisis earlier this year. In March, PacWest raised $1.4bn in cash from investment firm ATLAS SP Partners. The California-based bank also borrowed $3.7bn from Federal Home Loan Bank (FHLB), $10.5bn from the Federal Reserve Discount Window and $2.1bn from the Bank Term Funding Program.
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Pacific Western Bank explored a capital raise with potential investors but decided against it due to volatile market conditions.
Why it matters
Banc of California had $10bn of assets at the end of the first quarter, around one-quarter of PacWest. Since then, PacWest has been shedding assets since the crisis in an effort to boost liquidity. As well as suffering an outflow of deposits, the PacWest share price plunged by over 50%. The combined bank will have $25.3bn in total loans, $30.5bn in total deposits and more than 70 branches in California.
The detail
The deal includes a $400m investment from Warburg Pincus and Centerbridge Partners. PacWest stockholders will get 0.66 of a share of Banc of California common stock for each of their shares. The newly enlarged Banc of California plans to sell assets with the aim of repaying $13bn of wholesale borrowings. The combined bank will have about $36bn of assets. The aim is to close the deal by the end of 2023 or the first quarter of 2024. The bank will be branded Banc of California.
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