Pittsburgh-based PNC bank buys RBC Bank for $3.45 billion
In a move sure to negatively affect Homeowners Associations, Condominium Associations and Property Owner Associations and the professional association management companies who use their services, Pittsburgh-based PNC Financial Services Group is buying Raleigh-based RBC Bank in a deal worth $3.45 billion. The deal was announced early Monday after media reports over the weekend said PNC Financial had topped Winston-Salem based BB&T in the bidding for RBC.
“The addition of RBC Bank provides PNC a great opportunity to enter attractive southeast markets in a way that will create value for our shareholders,” said James Rohr, PNC’s chairman and chief executive officer, in a statement. “This transaction represents an outstanding growth opportunity for PNC.” Citing “people with knowledge of the matter” as its sources, Bloomberg said over the weekend that PNC would buy RBC. The Wall Street Journal also reported the deal in advance of the official announcement. The purchase price is made up of cash and stock. PNC reportedly will also acquire credit assets from RBC, pushing the deal total to $3.62 billion, Bloomberg said. PNC, which is buying RBC from its parent firm, the Royal Bank of Canada, is already targeting cost savings, which could translate into job cuts. In the statement, PNC said it expected to “achieve a reduction of approximately $230 million, or 27 percent, of RBC Bank (USA) and SmartStreet the RBC HOA bank division non-interest expense through operational and administrative efficiency improvements.”
This move will directly impact clients of the SmartStreet®division of RBC Bank, including associations and homeowners in those associations, through potential new fees for existing services that have been free under RBC Bank. The potential new fees would be charged for using lockbox payment processing (check by mail), Credit Card Merchant Services (online credit card and eCheck payments), ACH (automatic monthly debits from owners accounts), association loans, and monthly analysis fees for checking accounts associated with PNC’s Treasury Service Division. All of which are currently used every day by SmartStreet® Banking Customers and their management companies.
In 2006 when RBC Bank aquired SmartStreet® in its purchase of Flag Bank, many clients experienced issues with making deposits in RBC branches, inaccessibility of funds, and customer service issues. It has also been suggested by industry officials that many of the SmartStreet® clients would be adversly affected during the merger and integration with PNC in many of the same ways.