PITTSBURGH AND HOUSTON — PNC Financial Services Group Inc. (NYSE: PNC) and Spanish financial institution Banco Bilbao Vizcaya Argentaria S.A. (NYSE: BBVA) have signed a definitive agreement for PNC to acquire BBVA’s American operations, BBVA USA Bancshares Inc., for $11.6 billion.
The transaction, which has been approved by both companies’ boards of directors, is expected to close in mid-2021, subject to customary closing conditions, including regulatory approvals.
The transaction will bolster PNC’s national presence and create the fifth-largest bank in the United States, according to the Pittsburgh Post-Gazette. PNC will move beyond Charlotte-based Truist, the newly formed merger of equals between BB&T and SunTrust Bank.
Houston-based BBVA USA Bancshares manages $104 billion in assets and provides commercial and retail banking services through its banking subsidiary BBVA USA. The bank operates 637 branches in Texas, Alabama, Arizona, California, Colorado and New Mexico.
PNC operates 2,300 bank branches and nearly 18,000 partner ATMs nationwide. As of Sept. 30, 2020, PNC had $300 billion of assets under administration.
When combined with PNC’s banking footprint, the expanded company will have a coast-to-coast franchise with a presence in 29 of the 30 largest markets in the United States.
“Our acquisition of BBVA USA will accelerate our growth trajectory and drive long-term shareholder value through a strategic deployment of the proceeds from the sale of our BlackRock investment,” said William Demchak, PNC’s chairman, president and CEO, who referenced his firm’s sale of its $14.4 billion stake in BlackRock Inc. in May.
The BBVA acquisition adds approximately $102.4 billon in assets, $86 billion of deposits and $66 billion of loans based on BBVA USA’s third-quarter balance sheet.
BBVA operates 637 bank branches in Texas, Alabama, Arizona, California, Colorado and New Mexico. (photo courtesy of Facebook)
PNC expects to incur merger and integration costs of $980 million and achieve cost savings in excess of $900 million through operational and administrative efficiency improvements. No expansion or consolidation plans of individual bank branches or corporate office space were disclosed.
Upon closing, PNC intends to merge BBVA USA Bancshares into PNC, with PNC continuing as the surviving entity.
Post-closing, PNC plans to merge BBVA’s banking platform into PNC Bank NA, with BBVA USA branches assuming the PNC Bank name. PNC is not acquiring BBVA Securities Inc., Propel Venture Partners Fund I LP or BBVA Processing Services Inc.
“The deal enhances our already strong financial position,” says Carlos Torres Vila, BBVA’s executive chairman. “We will have ample flexibility to profitably deploy capital in our markets, strengthening our long-term growth profile and supporting economies in the recovery phase, and to increase distributions to shareholders.”
Bank of America, Citi, Evercore and PNC Financial Institutions Advisory acted as financial advisers to PNC, and Wachtell, Lipton, Rosen & Katz was its legal counsel.
J.P. Morgan Securities plc represented BBVA as financial adviser, and Sullivan & Cromwell LLP was the company’s legal counsel.
PNC’s stock price closed on Monday, Nov. 16 at $124.92 per share, down from $151.71 a year ago.
BBVA’s stock price closed on Monday at $4.02 per share, down from $5.25 a year ago.
— John Nelson