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PNC acquires RBC's US retail operations

June 20, 2011‐ New York, USA

In yet another action of mergers and acquisitions in the US banking space, PNC Financial Services Group Inc., has out did his rival regional bank BB&T Corp to clinch the acquiring the US retail operations of the Royal Bank of Canada for $3.45 billion. The transaction will add 424 branches into the fold of PNC taking its total count to 2,870 making it the fifth largest bank in the US.

This deal is limited to the US retail banking operations of RBC and does not include the operations of the bank such as capital markets and wealth management services. While RBC says that the deal allows it to concentrate efforts on growing its wealth management and capital market services, PNC feels it will get increased access to the attractive southeast markets in a way that will create value for its shareholders.

The deal also included the purchase of the credit card assets of Georgia National Association. RBC will get $165 million for the credit card assets.

The overall transaction will make PNC the fifth largest bank in the US and will make it generate cash starting 2013. The acquisition is approved by the Boards of both the banks and is expected to be completed by March. JPMorgan Chase & Co advised RBC on the sale, while Bank of America Merrill Lynch advised for PNC.

Way back in 2001, RBC purchased North Carolina-based Centura Bank for $2.2 billion. The fall of the real estate collapse and the later foreclosures has made the operations a bit difficult. From the Canada banking perspective, there are two major deals earlier to this transaction. Bank of Montreal agreed to buy U.S. lender Marshall & Ilsley Corp for $4.1 billion and Toronto-Dominion Bank agreed to buy Chrysler Financial for $6.3 billion. Only few days earlier, Capital One Financial Corp acquired the US retail operations of ING Direct USA from ING Groep for $9 billion.

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