Is This Another Too Big To Fail Bank

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Blog editor

Are we seeing the creation of another too big to fail bank.  Is this the time in history when we need to start enforcing the antitrust laws in the United States. These laws prohibit monopoly behaviors and unfair business practices. Antitrust laws are intended to encourage  competition in the marketplace. In the early 1900s Theodore Roosevelt used the antitrust law, to break up such giants as Northern Securities Co., Standard Oil Trust and James  Duke Tobacco Trust. The American taxpayer has bailed out the Savings and Loans in the 1980s and the  large banks with no assurances that we won't have to do it again in the future. It is time that we start reducing the size of the banks and other large businesses, rather than increasing the size, so that we can hold them accountable for their actions. We cannot keep bailing them out because they are too big to fail. In order for the free market to work, businesses that are not profitable or management is not capable, must be allowed to fail. This is the way that free markets work.

I am not a big fan of large government, there are quite a few government agencies which I would like to see eliminated completely, but I think this is one place which our government should take action on. It should also be considered that this should be done responsibly without political or big business interests coming into play. How long are we going to keep making these same mistakes over and over again.

 Samuel Burns

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PNC buys Royal Bank of Canada US banks for $3.45B

PNC Financial Services buying US retail operations of Royal Bank of Canada for $3.45B 

On Monday June 20, 2011, 7:36 am EDT

NEW YORK (AP) -- PNC Financial Services Group Inc. said Monday that it is buying the U.S. retail operations of Royal Bank of Canada for $3.45 billion.

PNC said that the transaction will bring its total to 2,870 branches and make it the fifth biggest among U.S. banks. RBC Bank (USA), based in Raleigh, N.C., has 424 branches and about $25 billion of assets.

PNC Chairman and CEO James Rohr said in a statement that the RBC acquisition will give PNC access to "attractive southeast markets in a way that will create value for our shareholders."

The deal adds about $19 billion of deposits and $16 billion of loans based on RBC Bank (USA) balances as of April 30.

The deal does not include Royal Bank of Canada's other U.S. operations providing capital markets and wealth management services.

RBC President and CEO Gordon Nixon said in a statement that RBC is fully committed to the U.S. market. He said the deal allows it to concentrate efforts on growing its wealth management and capital market services, which are the two largest components of its U.S. businesses.

PNC has also agreed to buy certain credit card assets of RBC Bank, (Georgia) National Association. RBC says that it will receive$165 million for the credit card assets.

It is the second big banking transaction in recent days following the announcement that U.S. bank Capital One Financial Corp. struck a $9 billion deal to buy the online bank of the Dutch financial services company ING.

A Wall Street Journal report on Sunday said that Pittsburgh-based PNC beat out rival regional bank BB&T Corp. for the RBC operations.

PNC has the option to pay for the deal with up to $1 billion in common stock. The company expects to pay for the cash portion of the transaction with available cash, debt issuance and a preferred stock offering.

It expects the buyout to add to its earnings by the end of 2013 or sooner depending on if any of the purchase price is paid for with its common stock.

PNC anticipates acquisition-related costs of approximately $322 million.

RBC expects the deal to result in a loss of about 1.6 billion Canadian dollars ($1.63 billion), which will be recorded in the current quarter. The transaction is expected to add to earnings in 2012.

The acquisition, which has been approved by both companies' boards, is expected to close in March.