PNC strikes $ 11B deal to buy U. S. operations

Deal would create nation’s fifth- largest retail lender

PNC Financial Services said Monday it would acquire the U. S. business of Spanish lender BBVA for $ 11.6 billion.

The transaction, one of the biggest banking deals since the 2008 financial crisis, would create the nation’s fifth- largest retail lender, with more than $ 550 billion of assets. BBVA USA Bancshares, which is based in Houston, has about $ 86 billion in deposits and $ 66 billion in loans.

The acquisition would be the latest in a string that PNC has used to grow nationally.

It expanded its foothold in the Southeast with its $ 3.45 billion acquisition of Royal Bank of Canada’s U. S. retail banking in 2011, and bought National City bank, based in Cleveland, in 2008.

With its acquisition of BBVA’s business, PNC will expand into Arizona, California, Colorado, New Mexico and Texas, giving it a presence in 29 of the country’s 30 biggest markets.

PNC’s shares rose around 2% in the trading session after the deal was announced, giving the bank a market capitalization of about $ 53 billion.

The bank, which is based in Pittsburgh, this year sold its stake in BlackRock, the world’s largest asset manager, for about $ 17 billion, freeing up cash to do another deal.

PNC said it expected the BBVA takeover to “substantially” replace the profit that the lender had reaped from its stake in BlackRock.

The deal follows a spate of consolidation in the financial services industry. First Citizens BancShares said in October it planned to buy CIT Group for about $ 2.2 billion, while BB& T and SunTrust announced plans to combine last year in a deal that valued the new lender at $ 66 billion.

Consolidation was also the motivation for BBVA to sell most of its U. S. operations. The proceeds put it in a stronger position to play a leading role in mergers in Spain’s banking sector, which kicked off in September when La Caixa and Bankia announced a deal to create Spain’s largest bank.

BBVA’s shares rose 15% in Madrid on the news, as did shares of other Spanish banks in anticipation of more deal- making. Banco Sabadell, which analysts have pegged as a potential target for BBVA, surged 25%.

PNC’s acquisition is expected to close by the middle of next year, pending approval by regulators and other closing conditions.