Some of the largest recent bank mergers involved the following institutions: JP Morgan Chase, PND Financial, Capital One, FirstMerit Bank, Washington Mutual, ING, National City Corp. RBC and Citizens Republic. Here is a look at these mergers and how they developed.

JP Morgan Chase & Washington Mutual (2008) – $1.9 Billion

By the middle of 2008 Washington Mutual had built one of the largest asset bases among U.S. banks at $310 billion. Most of this valuation was made up of a real estate portfolio worth $239 billion, consisting mostly of leveraged mortgages and toxic assets. The fragile state of WaMu’s balance sheet led to large loan losses and a fear that a total federal takeover and seizure of bank assets would occur, as in the case of the IndyMac Bankcorp Inc. failure of July 2008.

Federal officials, working with JP Morgan Chase brokered the buyout deal between the two banks. WaMu, who at the time was the largest savings and loan institution in the country, agreed to terms on September 25, 2008, creating JP Morgan Chase & Co.

PNC Financial Services & National City Corporation (2008) — $5 Billion

The week after the merger between JP Morgan Chase and WaMu saw an even larger deal brokered between Pittsburgh based PNC Financial Services and National City Corp. of Cleveland. The deal, valued at $5.2 billion, propelled PNC to the fifth largest bank in the U.S. at the time, with over 2,700 branches nationwide.

The deal was made necessary due to loan losses from bad mortgages held by National City, totaling nearly $20 billion. National City, which was the first bank in Cleveland to reopen after the Great Depression of the 1930s fell victim to bad assets attributed to losses in the manufacturing and auto industry (much of the bank’s lending was in Ohio and Michigan) and real estate losses in Florida at the height of the housing market collapse.

PNC Financial Services & RBC Bank (2011) — $3.6 Billion

PNC completed a second merger, although not as large as the acquisition of National City Corp. for $3.62 billion with the Royal Bank of Canada (RBC) unit based in Raleigh, North Carolina. The sale of the RBC unit in North Carolina, the smallest of RBC’s U.S. holdings, allowed the bank to rid itself of its 11 consecutive quarterly loss streak and total losses of $3.1 billion since 2007 related to the downturn in the housing market.

Capital One & ING Direct USA (2012) — $9 Billion

Capital One received regulatory approval from the Federal Reserve in February 2012 to purchase troubled ING Direct USA for a record $9 billion. The deal made Capital One the fifth largest U.S. lender and added $80 billion in deposits to its books. The merger was the result of a deal ING made with the European Union to sell its US operations as a condition of the bank’s bailout assistance.

FirstMerit Bank and Citizens Republic Bancorp (2013) — $900 Million

Citizens Republic Bankcorp of Flint, Michigan, agreed to a merger with FirstMerit Bank of Akron, Ohio for a reported $912 million, as reported in Crain’s Detroit Business. Losses totaling $1 billion attributed to the housing market crisis of 2007 and Citizens’ acquisition of Republic Bancorp Inc. in 2006 prompted the acquisition of the bank by FirstMerit. The merger will create a combined company with assets of $24 billion and 415 branches in, Illinois, Michigan, Ohio, Pennsylvania, and Wisconsin.

Dillon Smith writes frequently on banking, mergers & acquisitions, finance, accounting and other related areas. Dillon recommends that those with an interest in finance take a look at the finance jobs with moneyjobs.com.

Published on. Sunday 29 Dec 2013 16:06 — by Dillon Smith

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