PNC Financial Agrees to Purchse BBVA USA

Nov.16 — PNC Financial Services Group Inc. agreed to buy Banco Bilbao Vizcaya Argentaria SA’s banking operations in the U.S. for $11.6 billion in a deal that would make it the nation’s largest regional bank. Bloomberg’s Jan-Henrik Foerster reports on “Bloomberg Markets: European Open.”

Let’s get to the bbva story this morning because this is really moving markets a pnc financial has agreed to buy bbva’s us units what more do we do we know about this i mean i think there are various trends at play at the moment right so first of all um there’s banking consolidation and that is happening globally in the u.s it’s mainly focusing on regional lenders

Here with bbnt and sun trust you know that was one of the biggest banging deals in over a decade and obviously there’s um consolidation in europe right it has been picking up banks under pressure from low rates uh you know lots of regulatory costs um and so far you know banking m a has been focusing on domestic consolidation right and spain was one of the markets

Uh which has been consolidating so you saw the bankia kaiser bank deal um as well as you know smaller um m and avios and the regional space liba bank and caja and now you know bbva is creating a lot of um optionality with uh this disposal in the us you know with 10 billion you can do a lot in terms of m a but also um you know you can buy back shares you can

Pay out a dividend um obviously you need some capital at the moment you know for profit uncertainty but you know this is now creating a lot of strategic optionality for bbva and it also plays into this seeing of of bank and consolidation you know i think this would put other lenders under pressure to basically move faster okay so this is interesting i mean the

Christian savings talking about cross-border m a not being attractive if that if there’s no banking union and of course that puts domestic m a within spain for example very much more at the center of things because you don’t need banking union to make sense of that so where are we expecting to see the the spanish banking story really kick off then uh jan henrik

I mean it has been kicking off this year right we saw two significant deals i think i’m not sure when ceos say cross-border m a you know it needs a banking union sometimes i see this like an excuse obviously these deals can be very complicated you may need additional capital buffers you can’t move liquidity across borders but then you know if you want to do an

Offensive move right if you want to do something that you know changes the european landscape if you’re serious about creating a true european champion that can compete with us banks then you would do something cross-border um and i think that the ecb is very aware of all these issues and you know regulation will follow at some point with with regard to domestic

Consideration obviously synergies are much higher these views are less complex obviously these banks are retail banks if you look at bbva now they could potentially you could even think about a merger with santander i mean both banks are not the largest in spain so they would um take market share back so that’s obviously one um possibility another deal i see is

Bbva by sabadel and you know they will have plenty of cash now um to facilitate such a transaction obviously kovit is an uncertainty you know sabadel is very focused on loans to small and medium-sized enterprises and you know these have been hit very hard so you have no visibility on the evolution of the balance sheet um yeah but all these deals are likely now

And you know with 10 billion of cash from such a transaction you can basically sit down wherever you want to

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PNC Financial Agrees to Purchse BBVA USA By Bloomberg Markets and Finance