PNC Financial Services Group Inc. of Pittsburg confirmed its acquisition of Royal Bank of Canada's retail bank operations for $3.45 billion.
The deal helps RBC unload a business it has struggled to make profitable and a business that has lost money for several straight quarters, due in part to the collapse of the U.S. real-estate market. The transaction will mean that PNC will own 426 Royal Bank of Canada of which 83 were located in Florida, North Carolina, Alabama and other Southeastern states.
The deal marks the second big banking transaction in recent days following the announcement that U.S. bank Capital One Financial Corp. had struck a $9 billion deal to buy the online bank of Dutch financial giant ING.
RBC is also reportedly selling PNC related credit-card assets for $165 million and sale-related loss of C$1.6 billion, including an estimated goodwill write off of $1.3 billion, $19 billion in deposits from RBC's U.S. operations and $16 billion in loans including an estimated goodwill write off of $1.3 billion, in the current quarter.
RBC entered the US market in 2001 with the purchase of $2.2 billion purchase of North Carolina-based Centura Bank.
It will see the largest Canadian bank by assets exiting the U.S. retail banking market when some of its national rivals are expanding there. The report said that Pittsburgh-based PNC beat out rival regional bank BB&T Corp. for the RBC operations.
PNC expects to incur merger and integration costs of about $322 million, while reducing the noninterest expenses of RBC Bank (USA) by $230 million, or 27%, through operational and administrative efficiency improvements. PNC expects the deal to increase its earnings by the end of 2013.
PNC shares closed at $57.79 and RBC closed at $44.54 on Friday.