PNC Financial Services have been looking to obtain the U.S. operations of Banco Bilbao Vizcaya Argentaria (BBVA). The announcement came at the end of last week and we will be covering all of the latest developments in this article. The bank holding company from Pittsburgh, Pennsylvania, looks set to take over their competitor by means of a $11.6 billion transaction. A move that would establish themselves as the fifth largest retail bank in America.
One of the top performers on the S&P 500
PNC has been a scarce performer within the S&P 500 and is one of the financial service companies to be keeping up with the tech giants on the index. The acquisition of BBVA U.S. operations will bolster PNC’s presence on the markets and gain them 637 branches in Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico. Which would result in the company becoming the fifth largest retail bank in America. The transaction was deemed to be a ‘very positive transaction for all sides’ and Carlos Torres Vila, the BBVA Group Executive Chairman, has stated that, “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,”.
PNC shares 2% right after the announcement was made and gave the bank a market capitalization of approximately $53 billion. The current stock value sits at $127.07, a 19.44% increase from where it was 3 months ago. The year to date value has shown a loss and this is due the coronavirus pandemic that has sent shockwaves throughout all global financial markets. The acquisition is expected to be finalized by the middle of next year, should all regulations and conditions be met. This deal comes six months after PNC managed to sell their stake in BlackRock Investment Management Company for $14.4 billion and most Wall Street analysts expected the financial services group to be on the market for purchasing another bank. Brokerages have also expressed that they expect PNC to announce current quarterly sales in the area of $4.13 billion.
Excellent expected earnings
The deal is expected to add around 21% to PNC earnings for 2022 should the pandemic finally ease its grip. Most of the performance from PNC has been attributed to the Chief Executive Officer of PNC, Bill Demchak. Many analysts saw the selling of the BlackRock stake as a defensive move, Bill Demchak clearly had the alternative in mind. At the time he stated, “the importance of being able to play offence into this environment”. And that the intention “was to stay focused on growing”, despite the pandemic. PNC has shown a steady asset growth of 12% per year and it will certainly be a stock to follow in the coming quarter.