BBVA announced on Monday it has agreed to sell to PNC its subsidiary in the U.S. for approximately $11.6 billion (€9.7 billion) in cash. According to BBVA, the selling amount represents 19.7 times the unit’s 2019 earnings, which is almost 50% of BBVA’s current market capitalization.
BBVA is notably a Sunbelt-based bank in the U.S., with over $100 billion in assets and nearly 640 branches. Upon the transaction’s closing, PNCA will claim the fifth-largest U.S. bank by assets spot. Speaking about the acquisition, BBVA Group Executive Chairman, Carlos Torres Vila, stated:
“This is a very positive transaction for all sides. PNC has recognized the great value of our unique client franchise and of our great team in the US, who will be part of a leading financial services group in the country. The deal enhances our already strong financial position. 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.”
William S. Demchak, PNC Chairman, President, and CEO, further commented:
“Our acquisition will accelerate our growth trajectory and drive long-term shareholder value. This transaction is an opportunity to navigate our future from a position of strength, accelerating PNC’s expansion while drawing on our experience as a disciplined acquirer. We are excited to bring our industry-leading technology and innovative products and services to new markets and clients, leveraging our mutual commitment to building diverse and high performing teams and supporting the communities we serve.”
BBVA went on to add that the transaction will have a “positive impact” on its fully loaded CETI ratio of c.300 basis points, or €8.5 billion of CET1 generation. The deal is expected to close in mid-2021 once the required regulatory approvals have been obtained.