PNC Acquires BBVA’s American Branch

The Pittsburgh headquartered lender PNC has acquired the American branch of prominent Spanish bank BBVA. The acquisition cost PNC a total of $11.6 billion in cash, but what does the lender gain from this purchase? Because of the acquisition, PNC is set to become the fifth-largest bank in the United States of America in terms of assets under its management.  

This acquisition does follow PNC's sale of a $17 billion share in Blackrock, an asset management firm, earlier this year (May 2020). At that time, a sharp increase in the Covid-19 infection rate within the USA was met with anxiety over the US economy’s future stability. Interestingly, the $11.6 billion traded to acquire BBVA’s American branch approximately matches the after-tax proceeds of PNC’s sale of BlackRock shares. PNC Chairman Bill Demchak commented on the two deals, noting ‘we’ve managed to effectively trade the BlackRock ownership stake we had for a franchise that takes us coast to coast’. Demchak notes BBVA’s considerable branches in Denver, Texas, Florida, Alabama, California, and Arizona as highlights of the acquisition. 

BBVA enjoyed a 15% increase in share prices on Monday 16th November, the Financial Times reports. The bank seeks to withdraw from the US market and has managed to avoid selling at a discount or exchanging their stakes for stock in doing so. Because of this, Onur Genc, Chief Executive of BBVA, noted that ‘we have been pretty smart at capitalising on a very rare, unique opportunity of having a strategic purchaser with cash in hand’.  

With PNC having roughly $450 billion in assets and BBVA's US branch controlling over $100 billion in assets, PNC is set to leapfrog Truist Bank. Truist Bank is the result BB&T purchasing SunTrust for $27 billion in February 2019. The timing of the PNC-BBVA acquisition announcement also follows the emergence of vaccine candidates which have restored confidence in the global economy.  

By Brighton Dube