BBVA USA Is a Bad Bank. How Will It Help PNC?
PNC Financial Services (NYSE: PNC) grabbed headlines earlier this week when it announced it would be purchasing the U.S. banking operations of Spanish lender Banco Bilbao Vizcaya Argentaria in an $11.6 billion all-cash deal. The news ended months of speculation about which bank PNC would buy after the large Pittsburgh-based regional lender sold a roughly $14 billion stake in BlackRock this May to build capital in order to pursue a big acquisition. But with BBVA USA, PNC is acquiring a banking operation that has struggled, especially in recent years.
So, how will this benefit PNC in the long term? Let's take a look.
BBVA USA has more than $100 billion in assets and a large presence in a number of states, but the division has not performed well when you look at metrics that bank investors value. Even before the coronavirus pandemic sent the banking sector into tailspin, BBVA USA reported an adjusted return on assets -- a measure of how well a company uses its assets to generate profits -- of 0.66% in 2019. Its adjusted return on tangible equity, a measure of the potential returns shareholders can expect on their equity investment, was 7.03% in 2019. Those numbers are certainly nothing to rave about for a bank with over $100 billion in assets.
Source Fool.com
