United States Bank Mergers & Acquisitions (Fifth Third Bancorp)

Photo: A Fifth Third Bank branch in Sandusky, Ohio.


Fifth Third Bancorp

The history of the U.S. banking system has been one of instability.  It is indeed ironic that the world’s most productive and innovative economy also has a banking system that has seen periodic booms and busts, and a regulatory environment that has swung from extreme liberalism to extreme regulation.  For much of the 18^th and 19^th centuries, no nationwide regulation even existed; each state had its own (however loose) laws governing the state’s banking system.  In the late 19^th century, well over 1,000 banks across the U.S. issued their own banknotes, each backed by various degree of capital reserves.  Due to this lack of regulation, many unscrupulous fraudsters would establish what was known as “wildcat banks,” quickly issuing as many banknotes as possible and using this money to purchase goods, other hard assets, or exchanging their own notes for other more reliable banknotes, then suddenly disappearing with the loots. As a matter of fact, during the first half of the 19^th century, half of all U.S. banks would fail periodically, to be replaced by other equally unreliable new banks.

This finally changed in 1863, when the Congress passed the National Banking Act, creating for the first time a national banking registration and regulatory framework.  This federal bank act created the distinction between nationally-chartered and regulated banks and banks authorized and chartered at the state level.  Under the 1863 Act, only national banks subject to a strict capital reserve requirement were permitted to issue banknotes.  This legal change not only prompted many former state banks to re-organize and apply for a national charter, but also the establishments of many new national banks.  However, many banks also opted to keep their state charters without switching to a national charter.  Further complicating things, national banks are still subject to many state bank regulations at the local level.

It should be noted that the term “national bank” in this context refers to a “bank with a national charter,” and does not suggest a bank with a nationwide branch network.  Quite the contrary, the United States for a very long time heavily regulated where their banks could or could not operate.  Many states allowed their state banks to offer service from just the head office (i.e. “branching” was forbidden) whereas some states permitted branch banking. Meanwhile, the nationally-chartered banks were not allowed to offer branch banking at all.

In order to be fair to both state banks and national banks, the U.S. Congress in 1927 passed the McFadden Act, which basically accorded the same “branching rights” to national banks as to state banks.  As state-chartered banks were not permitted to operate outside of their home states, the McFadden Act forbade national banks based in one state from branching out into another state.  This restriction is why the 1927 McFadden Act is known as the law that banned “inter-state banking.”

It is under such a complex environment that in 1863, the Third National Bank of Cincinnati was founded, the name was adopted because there existed already the First National Bank of Cincinnati and the Second National Bank of Cincinnati.  In 1871, the Third National Bank acquired the Bank of the Ohio Valley (founded 1858) and became the largest bank in the state of Ohio.

Meanwhile, in 1888, the Queen City National Bank, founded six years earlier, underwent a re-organization and somehow condescended to the new name of The Fifth National Bank of Cincinnati.

In 1907, a widespread credit and confidence crisis in the U.S. led to nationwide bank runs; the weakened Fifth National Bank of Cincinnati in 1908 agreed to combine with the Third National Bank of Cincinnati to form the Fifth Third National Bank of Cincinnati.  Then in 1919, Fifth Third National became affiliated with an Ohio state-chartered financial firm called the Union Savings Bank & Trust Company, which was renamed the Union Trust Company in 1923. Fifth Third National’s affiliation with the state-chartered firm gave it the ability to circumvent (as a national bank) the restriction against having branches, and the bank acquired a number of smaller banks around the city of Cincinnati during the 1920s.

In 1927, Fifth Third National and Union Trust finally fully consolidated, and adopted the name Fifth Third Union Trust Company.  As one of the stronger banks in Ohio, the bank took over three insolvent banks between 1930 and 1933, in the midst of the Great Depression.

The rest of the 1930s and 1940s saw few significant changes for Fifth Third Union Trust. During the 1950s and 1960s, the bank consolidated a number of small banks within the state of Ohio.  The rapid growth in consumerism saw the gradual shift from commercial banking to personal banking for the bank.  In 1969, Fifth Third Union Trust adopted a simplified name: Fifth Third Bank. Five years later, a holding company called the Fifth Third Bancorp was created.  Still, despite a history of consolidations over a century, Fifth Third as recent as in 1976 only had 37 branches around the Cincinnati county.

State and federal restrictions on branch banking finally relaxed in the 1980s, first allowing Ohio banks to open branches outside of their home counties, then certain states within the same region began to permit each other’s banks to cross state borders.  In 1985, Fifth Third Bank acquired the American National Bank of Newport, just across the Ohio-Kentucky state line.  Even though Newport is part of the Metropolitan Cincinnati area, as it is in the state of Kentucky, Fifth Third was now allowed to operate there until the legislation change of 1985. Suddenly liberated from the branching restrictions, Fifth Third quickly acquired more banks in northern Ohio, Kentucky and Indiana (the state to the west of Ohio).

The decade from 1985 to 1996, however, was otherwise very turbulent times in the American banking system.  A sudden sharp rise in interest rates due to soaring inflation caught the savings and loans (S&Ls, as banking co-operatives are known in the U.S.) off-guard, as their business model relied on using personal deposits as the source of capital, then lending it as mortgage loans to borrowers. As personal deposits are often short-term and open in nature, but the mortgage loans are of longer and fixed-terms, as interest rates spiralled in the early 1980s, the S&Ls found their cost of capital (interest rates paid to personal deposits) rising high above the rate of returns (mortgage loan rates that were fixed before the sudden interest rate jumps).  Before long, the S&Ls were suffering from severe losses from the asset-liability mis-match. At the same time, the credit crisis led to a sharp drop in real estate prices and the overall economy, and mortgage defaults skyrocketed.  As capital was depleted, many S&Ls became insolvent.  The situation became so dire that even the government-run deposit insurance schemes at quite a few states went bankrupt.

Fifth Third, being a more cautiously-run bank, took advantage of the crisis and absorbed many smaller rivals in financial trouble throughout the late 1980s and early 1990s, and slowly but surely expanded its branch network and market share.  Then in 1992, Fifth Third held private talks to merge with Ohio rival Star Banc Corp., which traces its history to the First National Bank of Cincinnati.  However, the discussion failed to result in a deal.  (Star Banc Corp. eventually became U.S. Bancorp.)

In 1994, Fifth Third made two acquisitions.  First, it bought the Cumberland Federal Bancorporation for USD $149-million, gaining 43 branches across Kentucky.  Later in the same year, it bought Falls Financial for USD $76-million.  Falls Financial was a small bank based in northeastern Ohio.  Then in 1995, Fifth Third bought a small bank in Florida called the Bank of Naples, which had three branches.

Throughout the rest of the 1990s, the bank made numerous bank acquisitions in its core market of Ohio, Kentucky and Indiana, each time gaining no more than a dozen branches or so.  Fifth Third, as such, was still a regional bank with meaningful operations only in three conjoining Midwest states at this time.

Recent transaction(s):

• In 1998, Fifth Third (branded as “5/3”) bought another Ohio rival CitFed Bancorp of Dayton for USD $727-million, whose subsidiary Citizens Federal Bank had 36 branches.
• Also in 1998, 5/3 purchased State Savings Co. for USD $918-million. The deal added 43 branches in the Columbus (Ohio) area and ten in Arizona to 5/3’s network, though the small Arizona network was disposed of later. By now Fifth Third had over 450 branches across Ohio, Kentucky, Indiana and Florida.
• Also in 1998, 5/3 bough two other financial services firms, namely the Ohio Company, a full-service broker-dealer and investment manager; and W. Lyman Case & Co., a commercial mortgage financier.
• In 1998 and 1999, 5/3 acquired several smaller banks in Ohio, Kentucky and Florida.
• In 1999, 5/3 made its biggest acquisition to date when it bought CNB Bancshares of Indiana for USD $2.3-billion. CNB’s subsidiary Civitas Bank had 145 branches and 200 ATMs mostly in Indiana, but also a small presence in Kentucky, Illinois and Michigan.
• Also in 1999, 5/3 bought Peoples Bank Corp. of Indianapolis for USD $228-million. Peoples Bank & Trust had nine branches.
• In 2000, 5/3 bought Ottawa Financial Corp. for USD $168-million.  Ottawa Financial had 27 branches in Michigan.
• Also in 2000, 5/3 bought Capital Holdings of Ohio for USD $244-million.
• In 2001, 5/3 acquired Old Kent Financial Corp. for USD $4.92-billion.  Old Kent had 340 branches in Michigan, Illinois and Indiana. The deal made Fifth Third one of the top five banks in Michigan and the Chicago area.
• In 2004, 5/3 bought First National Bancshares of Florida, Inc., for USD $1.58-billion. First National Bank of Florida operated 77 branches mainly in Southwest and Central Florida.
• In 2007, 5/3 agreed to purchase R-G Crown Bank from Puerto Rico's R & G Financial Corp. for USD $288-million. R-G Crown Bank operated 30 branches in Florida and 3 in Georgia.
• In 2007, 5/3 bought First Charter Corp. of Charlotte, North Carolina, for USD $1.09-billion. First Charter Bank operated 61 branches in North Carolina and another 2 in Georgia.
• By 2014, 5/3 operates over 1,300 branches across 12 contiguous Midwest states of Ohio, Kentucky, Indiana, Illinois, Michigan, Missouri, Georgia, North Carolina, Pennsylvania, West Virginia, Tennessee and Florida.
• In May 2018, 5/3 agreed to acquire Chicago-based MB Financial for USD $4.7-billion. MB Financial Bank's 91 branches will join Fifth Third's existing 148 branches in the city, though as many as 50 branches will be shut following the consolidation. The purchase will expand Fifth Third's deposit base in the Chicago area from $11-billion to $25-billion, making it one of the top four banks in the market.
• In October 2025, 5/3 announced that it would acquire Dallas-based Comerica Inc. and Comerica Bank for USD $10.9-billion. Comerica had over 400 branches in Arizona, California, Florida, Michigan and Texas; as well as wholesale banking operations in Canada and Mexico. Comerica's principal market was in middle-market business lending, and would complement 5/3's strength in retail and digital banking. The enlarged bank would have assets of USD $288-billion, making it the 9th-largest bank in United States.

Click here to return to the Index page.

Sweden Bank Mergers & Acquisitions (Swedbank)

Photo: The sign of a Swedbank branch. The oak tree logo has been in use by one of Swedbank's predecessor savings banks since at least 1928 to signify the benefits of long-term savings and growth.

Photo source: Swedbank's corporate press web page.

Swedbank AB (formerly FöreningsSparbanken AB)


Sparbanken Sverige AB (Swedbank)

Throughout the Renaissance period to the early 19th century, depositing or borrowing money at a bank was reserved only for the aristocrats and wealthy merchants with access to private banks. The average person at the time would not have had the surplus money to save, the credibility to borrow, or access to a bank.

Then in 1810, a clergyman named Henry Duncan founded the Ruthwell Parish Bank in the Scottish village of Ruthwell. The new bank permitted low-income villagers to open accounts with minimal balances. The idea is to encourage saving for a rainy day and for old age security. Rev. Duncan used the bank’s surplus to run a charity for the poor, as well as to build a parish school for the local children.

The concept under which bank profits are channeled to promote charitable causes and social welfare soon spread like wildfires across Britain and Europe, prompting the Swedish government to launch a study of the Scottish savings bank movement. In 1820, a German merchant named Eduard Ludendorff established Sweden’s first savings bank in Göteborg (Gothenburg) with the aim to encourage long-term savings for the average citizens, to offer small loans to individuals and small businesses, and to finance local and regional projects.

By the 1870s, more than 300 savings banks had sprung up across Sweden. Interestingly, the savings banks operated for decades without any regulatory legislation until 1892, when the first Savings Bank Act became law. In 1900, the Swedish Savings Bank Association was established to facilitate collaboration between the member banks. This led to the creation of Sparbankernas Bank (literally, the "Savings Banks’ Bank," which also used a second brand name “Swedbank”) in 1942 to handle international settlement of fund transfers and foreign exchange for its members.

In the 1970s, banking reforms in Sweden largely eliminated the legal distinction between the commercial banks, savings banks and co-operative banks. Throughout the booming 1980s, the savings banks and co-operative banks exploited the de-regulation and snatched market share from the commercial banks by aggressively lending to less credit-worthy clients. The engagement of this fierce competition led to a systematic disregard of default risk by the entire banking sector. The resulting massive increase in money supply inflated a speculative real estate bubble in the late 1980s.


Föreningsbanken AB

In 1915, the Swedish parliament passed legislation for the creation of the agricultural co-operative credit society (banking) system. The co-operative banking system was based on the “one member, one vote” principle, under which the credit society is owned collectively and mutually by its member-clients and not by shareholders who can buy and sell shares at will. The mandate of the agricultural credit co-op was chiefly to promote agriculture and provide loans and savings accounts for small-scale farm owners, not to maximize profits.

Sweden’s first agricultural credit co-op opened for business in 1915 in Västerhaninge, south of Stockholm. Under the co-operative structure, each member was required to work in the bank based on the size of his farm. By the 1930s, the numerous agricultural banking co-ops had almost 800 offices.

In 1956, significant changes to the agricultural co-operative bank legislation eliminated the members’ personal responsibility for the banks’ operations, and also relaxed restrictions that previously only offered loans to property title holders. In 1958, the various agricultural credit co-ops (known as “jordbrukskassan” in Swedish) established a “central bank” named Jordbrukets Bank ("Bank of Agriculture"), whose function was similar to the savings bank sector’s “central bank” Sparbankernas Bank. Subsequently, Jordbrukets Bank was renamed Föreningsbankernas Bank ("Union Bank’s Bank").

Following Sweden’s banking reforms in the 1970s, the savings banks and the agricultural co-operative banks were no longer restricted to taking small personal deposits only, and they began to compete with the limited-liability commercial banks. In 1974, the various agricultural co-op banks formally adopted the Föreningsbanken (“Union Bank”) brand.


The Swedish Economic and Banking Crisis in the Early 1990s

Towards the late 1980s, Sweden and the rest of Scandinavia suffered a major economic and banking crisis. Loose lending practices earlier in the decade had brought about a speculative real estate bubble. By 1987, Sweden’s inflation rate began to rise noticeably, which caused interest rates to rise starting in 1988. Meanwhile, the Collapse of Communism in the Soviet Bloc in 1989 led to economic chaos in many of Sweden’s exports markets. As exports and demand for goods and services slumped, unemployment rose. Consumer confidence tumbled and the real estate bubble burst. To use an oxymoron, it was an economic “perfect storm.”

As borrowers defaulted on their loans en masse, the over-leveraged banking sector saw its losses skyrocket. In October 1991, Sweden’s largest savings bank Första Sparbanken’s equity capital was wiped out by losses. Unfortunately, the liquidity crisis was not unique to Första, and soon the entire panic-stricken Swedish banking sector was on the verge of collapse.

By September 1992, the Swedish government had to pledge unlimited state loan guarantees for the banking sector to avoid a cross-the-board bank run, covering 114 banks. The only bank that did not require the state guarantee was Svenska Handelsbanken, Sweden’s dominant private-sector bank.

The crisis culminated in the collapse of confidence in the Swedish economy and currency in September 1992. As international investors dumped the Swedish krona (SEK) in the foreign exchange market, the central bank Sveriges Riksbank raised the overnight interest rate to 500 per cent per annum in a desperate but futile attempt to stem capital outflow, and to maintain its currency peg with the European Currency Unit (ECU) as part of the European Exchange Rate Mechanism (ERM).

In November, 1992, Sweden conceded defeat and gave up attempts to maintain the krona’s peg with the ECU. Sweden has since opted to keep its own currency rather than adopting the Euro.

The economic and banking crisis accelerated the pace of reform for the savings banks and the agricultural co-operative credit societies in Sweden. In the savings bank sector, the business operations and management were separated from the socio-economic mandates of the savings banks. The goal was to achieve greater strategic and management freedom away from loan approvals made based on the socio-economic mandates. Far more disciplined risk management controls were also implemented as part of the reform.

A central piece of the restructuring was to convert the savings banks’ former public-sector (i.e. regional government-owned) status into the joint-stock (public limited-liability status, or “Aktiebolag” and “AB” in Swedish) format. The regional foundations initially still held 100% of the joint-stock savings banks. However, as the individual savings banks were far too small to engage in major lending activities without exposing themselves to excessive risks, the foundations began to merge their individual savings banks into a much bigger banking group.

Recent transaction(s):

• In 1991, 12 regional agricultural co-operative banks merged with their central bank unit Föreningsbankernas Bank to form the new Föreningsbanken AB.
• In 1992, 10 savings banks joined forces with the Sparbankernas Bank (also known as Swedbank, the savings banks’ central bank unit), to form the Sparbanksgruppen AB ("The Savings Banks Group"). Like the former Sparbankernas Bank, the holding company Sparbanksgruppen had no bank licence of its own, as the 10 regional savings banks continued to operate as separate legal entities. The regional foundations that used to own the individual banks now collectively owned 100% of the parent company Sparbanksgruppen, which was also known as Swedbank.
• Later in 1992, as a second step of the industry restructuring, Sparbanksgruppen AB (Swedbank) merged with the ailing Sparbanken Första to form Sparbanken Sverige AB (“Savings Bank Sweden," also known as Swedbank).
• In 1994, Föreningsbanken AB was listed on the Stockholm stock exchange.
• In 1995, the foundations holding 100% of Sparbanken Sverige/ Swedbank floated part of their stake in the bank on the Stockholm stock exchange.
• In 1997, Sparbanken Sverige/ Swedbank merged with Föreningsbanken to form FöreningsSparbanken AB. The deal was valued at USD $1.6-billion according to some reports. The new FöreningsSparbanken/ Swedbank became Sweden's No. 2 bank at the time.
• In 1999, FöreningsSparbanken/ Swedbank raised its holding in Estonian-based Hansabank to more than 50%. Founded in 1991 in Estonia, Hansabank also operated in Latvia and Lithuania.
• In 2001, FöreningsSparbanken and rival SEB agreed to merge and form SEB Swedbank. However, in September, the European Union’s anti-competition authority blocked the merger, citing a significant loss of competition if the merger was allowed to proceed. The merger proposal was subsequently terminated.
• In 2004, Swedbank’s majority-owned Hansabank bought Russia’s Kvest Bank.
• In 2005, FöreningsSparbanken bought the 40% of Hansabank not already owned for Eur 1.73-billion.
• In 2006, FöreningsSparbanken officially changed its name to Swedbank AB.
• In 2007, Swedbank bought Ukraine's TAS-Kommerzbank for USD $735-million (Eur 536-million). TAS-Kommerzbank operated 170 branches and had a staff of 2,300. It was the country's 13th largest bank.
• In October 2008, Swedbank raised SEK 12.4-billion (USD $1.5-billion) in a preferred securities rights issue during the global credit crisis.
• In October 2009, Swedbank raised another SEK 15.1-billion (Eur 1.47-billion, USD $2.1-billion) in new capital from a fully-subscribed rights issue. Swedbank opted to raise capital from its own shareholders rather than to seek more state guarantees from the Swedish government. The bank was experiencing a sharp rise in loan defaults in its Baltic operations.

Click here to return to the Index page.

Germany Bank Mergers & Acquisitions (HypoVereinsbank)

Photo: HypoVereinsbank’s (HVB Group) head office building Hypo-Haus in Munich, Germany.
Photo source: UniCredit HVB's web site.

{Limited-Coverage Page}
HVB Group and its Bank Austria Creditanstalt subsidiary were taken over by Italy's UniCredit SpA in 2005.



HypoVereinsbank / HVB Group AG (a subsidiary of Italy's UniCredit SpA)


Bayerische Hypotheken- und Wechsel-Bank (Hypo-Bank)

In 1835, King Ludwig I of Bavaria signed a decree authorizing the establishment of Bayerische Hypotheken- und Wechsel-Bank (“Bavarian Mortgage and Exchange Bank”). As its name suggests, the bank’s main focus was on mortgage lending and commercial lending (discounting bills of exchange for businesses). The bank made its first securities underwriting deal in 1879 when it participated in a syndicated bond issue to finance the Bavarian railroad.

In 1889, Bayerische Hypotheken- und Wechsel Bank joined the much larger Deutsche Bank, Disconto-Gesellschaft and other partner banks to create the Deutsch-Asiatische Bank in the Chinese port city of Shanghai. China during the late 19th century was very weak and foreign countries seized the chance to impose preferential trading rights and to establish colony-like territories in China for their industrial and commercial exploitation. Deutsch-Asiatische Bank was only one of a dozen or so British, French, Belgian, Dutch, German, Russian, Portuguese, Scandinavian, Japanese and American banks that created subsidiaries in China to further the economic interests of their home countries.

By 1908, Hypo-Bank (as Bayerische Hypotheken- und Wechsel-Bank was commonly known) had become the leading mortgage lender in the country but Germany soon plunged into 50 years of turbulence. The outbreak of World War I in 1914 embroiled Europe, Africa and the Middle East in deadly battles as rival European powers and the Ottoman Empire invoked defence alliances and declared war upon each other and their overseas colonies. The four-year war led to some 35 million casualties and ended four major imperial powers, including the German Empire.

After its defeat, Germany suffered a decade of economic and social turmoil. In 1922, radical currency devaluation and a massive increase in money supply led to the infamous hyper-inflation, which made the German mark practically worthless. The hyper-inflation then fuelled a consumption boom, as consumers and businesses alike would rather fully spend the paper money that they received daily, than to hold on to it overnight when it was worth even less the following day. The sky-high inflation rendered Hypo-Bank’s main business of mortgage lending meaningless, as repayments made by borrowers became worthless to the bank due to the much diminished purchasing power of money. Meanwhile, in order to pay the Treaty of Versailles reparations, Germany borrowed heavily from foreign banks and creditors during the 1920s.

Conditions worsened as the 1920s drew to a close when the American stock and real estate markets crashed in October 1929. Foreign creditors withdrew their credit to Germany as loan losses mounted. Then in May 1931, Austrian bank Credit-Anstalt became insolvent due to years of excessive lending, poor management and the cruimbling economy, sending more shocks to the German public. In July, the panic reached its peak in Germany and led to a general run on the nation’s banks. The government imposed a forced, two-day shutdown of all banks on July 14 and July 15, 1931, to restore order in the banking industry.

Ironically, it was the rise of Nazism and rearmament spending that lifted the German economy in the mid-1930s. Lives and economic development were once again devastated across the world by World War II, when Japan invaded China in 1937, and Germany invaded Poland in 1939.

Hypo-Bank wrote off numerous mortgage loans and properties as millions of people were displaced and cities and towns were destroyed during the war. Peace returned in 1945 but things only slowly began to improve in 1947 after the signing of the European Recovery Plan (commonly known as the Marshall Plan), which saw the United States providing USD $12-billion in aid for Western Europe to rebuild the devastated areas. As the German economy boomed, Hypo-Bank greatly expanded its network of branches in the 1960s and 1970s. In the 1980s, the bank formed alliances with other European banks to offer syndicated loans internationally. These alliances allowed smaller European banks to participate international financings that were otherwise too big and too risky for them to offer on their own individually.

The year 1990 was an important one for German history as the collapse of the communist Soviet Bloc led to the reunification of the two Germanys. Hypo-Bank moved aggressively into the East German mortgage market in the early 1990s, a move that the bank would later regret. The bank, however, made the right move by also entering the Eastern European market. In 1992, it set up a subsidiary in Czech Republic; one year later, more subsidiaries were created in Hungary, Poland and Slovakia.


Bayerische Vereinsbank

In 1869, King Ludwig II of Bavaria granted a licence to a group of Munich private bankers to establish the Bayerische Vereinsbank. The bank set out to serve the rapidly industrializing Bavarian economy. In 1870, it issued a loan to finance the building of the Bavarian railway and one year later, began to issue real estate loans. For the next 100 years, Bayerische Vereinsbank remained largely regional in nature compared with the Berlin-based grossbanken (Big Banks) such as Deutsche Bank and Dresdner Bank.

Following World War I, the German economy went into a tailspin and Bayerische Vereinsbank responded by forming alliances with several banks in Berlin and Bavaria. These alliances typically involved cross-minority-shareholdings between the smaller banks, as well as cross-representation on each other’s boards of directors. By adopting this strategy, these smaller banks were able to preserve their independence by making themselves unpalatable to the grossbanken, and yet the alliances allowed them to assist each other financially in times of crisis.

In the aftermath of World War II, the grossbanken like Deutsche Bank, Dresdner Bank and Commerzbank were found guilty of war crimes in financing the Nazi war machine and were broken up into many smaller banks. Regional banks like Bayerische Vereinsbank and Bayerische Hypotheken- und Wechsel-Bank were spared and allowed to operate freely. In 1969 Bayerische Vereinsbank first proposed to combine with its rival Bayerische Hypotheken- und Wechsel-Bank to compete with the grossbanken. Talks however broke off in 1971 when the Bavarian state government insisted that the Bayerische Staatsbank be part of a three-way merger. Subsequently, Bayerische Vereinsbank did end up acquiring Bayerische Staatsbank alone.

In the 1970s Bayerische Vereinsbank finally forayed into the international scene when offices were opened in Rio de Janeiro, Tokyo, Tehran, New York, Chicago, Paris, Johannesburg, London and Hong Kong.

In 1989, Bayerische Vereinsbank joined four other Western European banks (Austria’s Creditanstalt-Bankverein, Banca Commerciale Italiana, France’s Credit Lyonnais and Finland’s Kansallis-Osaki-Pankki) as well as three state-owned Soviet banks (Vneshekonombank, Sberbank and Promstroibank) to establish the International Moscow Bank. It was the first ever Soviet-based bank funded partly by western capital. (Both Bayerische Vereinsbank and Creditanstalt-Bankverein became part of the HVB Group, and HVB Group and International Moscow Bank both became part of UniCredit.)

Recent transaction(s):

• In 1992, Bayerische Vereinsbank acquired Austria’s Schoeller & Co. Bank, a private bank with 13 branches.
• In 1997, Bayerische Vereinsbank and Bayerische Hypotheken- und Wechsel-Bank announced their merger agreement. The move was to pre-empt a rumoured takeover of Bayerische Vereinsbank by Deutsche Bank and of Bayerische Hypotheken- und Wechsel Bank by Dresdner Bank. The merger was completed in 1998 and the new bank took up a new name: Bayerische Hypo- und Vereinsbank, to be commonly known as HypoVereinsbank.
• Between 1998 and 1999, HypoVereinsbank acquired majority control of Poland’s Bank Przemyslowo-Handlowy (BPH); HypoVereinsbank then merged its own Polish operations BV Polska and Hypo-Bank Polska into the newly-acquired BPH.
• In 2000, HypoVereinsbank acquired Bank Austria Creditanstalt (BA-CA) for Euro 7.8-billion (USD $7.3-billion). BA-CA was Austria’s largest bank with 280 domestic branches, plus another 400 branches across Central and Eastern Europe.
• In 2001, HypoVereinsbank merged its own Polish operations BPH with Bank Austria Creditanstalt’s Polish subsidiary Powszechny Bank Kredytowy (PBK) to form BPH PBK S.A., one of the largest banks in the country.
• In 2001, HypoVereinsbank transferred its Central and Eastern European operations to its BA-CA subsidiary.
• In 2002, Bayerische Hypo- und Vereinsbank changed its name to HVB Group.
• Also in 2002, HVB’s BA-CA subsidiary bought Bulgaria’s Bank Biochim.
• Also in 2002, HVB’s BA-CA subsidiary bought 62.6% of Croatia’s Splitska Banka from UniCredito Italiano for Eur 94-million. In 2005, Splitska Banka became part of UniCredito Italiano once again when the Croatian bank's parent HVB Group was taken over by UniCredito Italiano.
• In 2003, amidst mounting loan losses at HVB Group due to a wave of corporate bankruptcies resulting from the “tech bust” and the September 11 fallouts, HVB raised Euro 958-million cash by re-floating 22.5% of Bank Austria Creditanstalt on the Vienna and Warsaw stock exchanges.
• In 2004, HVB’s BA-CA bought Bulgaria’s Hebros Bank.
• Also in 2004, HVB’s BA-CA bought Serbia’s Eksimbanka.
• Also in 2004, HVB Group contributed 2/3 of a USD $100-million capital injection for International Moscow Bank and raised its stake to 52.9%, wrestling control of the Russian bank from its other Swedish and French minority shareholders.
• In 2005, UniCredito Italiano bought HVB Group for Euro 15.4 billion (USD $19.4-billion). In addition, UniCredito Italiano also made an offer to buy out the 22.5% of Bank Austria Creditanstalt held by the public for Eur 2.63-billion, as well as the 29% of Poland's Bank BPH PBK held by the public for about Eur 1.48-billion. The three offers totalled about Eur 19.5-billion (USD $24.5-billion). HVB Group already owns 77.5% of Bank Austria Creditanstalt and 71% of Bank BPH PBK.
• Subsequently, however, the Polish banking regulator vetoed UniCredito Italiano's bid to privatize Bank BPH PBK for Eur 1.55-billion. UniCredito Italiano withdrew its offer for the Polish bank in early 2006, but still indirectly held 71% of the bank through its acquisition of Germany's HVB Group.

Click here to return to the index page.

Japan Bank Mergers & Acquisitions (Sumitomo Mitsui Financial Group)

Photo: A Sumitomo Mitsui Bank branch in Kamakura.
Photo credit: tomochu. Here is a link to her photostream: http://www.flickr.com/photos/31357178@N08/



Sumitomo Mitsui Financial Group, Inc.

Sumitomo Mitsui Banking Corp. was created in 2001 when Sakura Bank and Sumitomo Bank merged. Sakura Bank itself was known as the Mitsui Taiyo Kobe Bank when formed by the 1990 combination of the Mitsui Bank and the Taiyo Kobe Bank.

The Mitsui Bank

Mitsui has been a powerful name in the Japanese business world for several centuries. In 1672, Mitsui Takatoshi took over a family business and opened a kimono shop in Edo (now Tokyo) in the following year. This kimono shop eventually developed into department store giant Mitsukoshi in the early 1900s, which following a merger with rival Isetan, still exists today as Isetan Mitsukoshi Holdings. Other businesses established by the extended family eventually evolved into the modern-day Mitsui keiretsu (the post-war Japanese conglomerates resulting from the re-grouping of the former zaibatsu).

In 1683, the Mitsui family launched a money exchange business that handled cash transfers between Osaka and Edo. This money exchange marked the House of Mitsui’s first involvement in finance. During the 18th and early 19th centuries, Mitsui became a powerhouse in the fabric trade, finance and mining.

In the 1860s, the House of Mitsui, long supporters of the Tokugawa shogunate, switched allegiance to the Meiji forces that culminated in the restoration of the emperor in 1868. The new regime widely opened up Japan’s ports to foreign trade and visitors for the first time since the 1630s. The Meiji government also promptly rewarded the House of Mitsui’s support with special privileges to manage its tax revenue. Some described the Mitsui finance house as practically the state treasury of the period.

In 1873, the House of Meiji and the House of Ono jointly founded the Dai-Ichi Kokuritsu Ginko (literally the First National Bank), whose responsibilities included issuing currency on behalf of the imperial treasury for the next 23 years. In 1876, the House of Mitsui established an international trading concern called Mitsui Bussan as well as a bank entirely of their own, the Mitsui Bank, to exclusively finance and manage payments for Mitsui Bussan.

Japan’s modernization policies led to a great rise in industrial output, trade volume and most importantly, the country’s rise as a major economic, political and military power in the Far East towards the end of the 19th century. Its rising military aggression towards its neighbours resulted in the Sino-Japanese War of 1894-95, the invasion of Manchuria in 1931, then a full invasion of China in 1937, which in 1941 became part of the larger World War II when Japan attacked Pearl Harbour in Hawaii. All these military conflicts involved heavily and benefited greatly Japan’s zaibatsu including Mitsui Bussan and the Mitsui Bank.

In 1943, amidst the war with the Allied forces, the Mitsui Bank merged with the Dai-Ichi Bank to become the Teikoku Bank. The Dai-Ichi Bank was reformed out of the original Dai-Ichi Kokuritsu Ginko in 1896, when the latter’s central bank status ended. Teikoku then took over Jugo Bank in 1944.

Following the devastating World War II, the General Headquarters (GHQ) of the Supreme Commander of the Allied Powers were determined to ensure the pre-war industrial- banking conglomerates be never powerful enough to support and finance a militarist regime again by enacting laws to break up the zaibatsu system. Powerful zaibatsu like Mitsubishi, Mitsui, Sumitomo and Yasuda were broken up into hundreds of smaller businesses and banned from dealing with their former associated companies. In 1948, the Dai-Ichi Bank was re-spun off from Teikoku Bank. Teikoku itself was banned from dealing with the former Mitsui group.

Japan’s economy expanded rapidly in the 1950s as the burgeoning export sector led to sustained employment growth and rising income. During the decade, Teikoku opened overseas offices in London, Mumbai (Bombay) and Bangkok. The bank also introduced an early form of computer system. Teikoku reverted to its old name of Mitsui Bank in 1954 when the anti-monopoly legislation was relaxed. Gradually, the former zaibatsu system re-formed to a more loosely-affiliated system known a keiretsu. In the early 1950s, the new Mitsui & Co. group of companies were re-established.

The 1960s saw a great increase in both deposits and loans in the Japanese banking system as the economy continued to boom. In 1968, Mitsui took over a Tokyo bank called Toto Bank.

The Taiyo Kobe Bank

The Taiyo Kobe Bank was created in 1973 by the merger of the Kobe Bank and the Taiyo Bank. Both banks were unrelated to the traditional pre-war zaibatsu banks such as Mitsubishi, Mitsui, Sumitomo and Yasuda.

The Kobe Bank was the older one of the two and was established in 1936 from the consolidation of seven regional banks in the Hyogo Prefecture, near the key cities of Kobe, Osaka and Kyoto. While many smaller banks were absorbed by the powerful zaibatsu banks during World War II, the Kobe Bank had maintained its independence and at the end of the war, added the trust business to its lines of products.

The Kobe Bank focused on serving small- and medium-sized businesses in the Kobe region that were too small to attract the big zaibatsu banks. Still, following its clients’ business, the bank first opened representative offices in London and New York in the late 1950s, then upgraded them into full branches by the early 1970s. In 1960, to comply with new banking legislation, the Kobe Bank sold its trust business to Toyo Trust & Banking.

The Taiyo Bank traces its history to the 1940 founding of the Dai Nihon Mujin out of four small mutual savings and loan companies in Tokyo. The small bank struggled through the difficult war years, and in 1948 dropped Dai from its name. Following banking legislation changes, Nihon Mujin was re-chartered in 1951 as a mutual bank under the name Nihon Sogo Bank (meaning Japan Mutual Bank). In 1968, Nihon Sogo demutualized itself and adopted the name Taiyo Bank.

However, despite all the transformations, the lack of economies of scale and nationwide operations made it difficult for the Kobe and the Taiyo to compete with their larger rivals. In 1973, the Kobe Bank and the Taiyo Bank combined to form the Taiyo Kobe Bank, becoming the largest of all city banks in Japan based on the number of branches.

Sumitomo Bank

Like the House of Mitsui, the Sumitomo conglomerate also traces its history to the 17th century. The family was then headed by a Kyoto book shopkeeper and herbal medicine man named Masatomo Sumitomo. Masatomo’s brother-in-law learnt and developed a new copper-smelting technology, which turned the family business into a leading copper refiner by the 1650s. Over the next three centuries, the House of Sumitomo expanded into the textile, sugar, chemicals and medicine business, and moved its base to from Kyoto to the Osaka region.

Following the Meiji Restoration in 1868 and the opening of Japan’s borders to foreign trade and merchants, the country rapidly adopted new technologies from the West. As a historic base metals refiner and trader, the Sumitomo group further expanded into the machinery, electric cable and coal industries, becoming one of Japan’s most powerful zaibatsu. In 1895, the conglomerate established a private bank named Sumitomo Bank. The bank was re-organized into a limited-liability company and floated publicly in 1912.

In 1945, Sumitomo Bank took over Hannan Bank and Ikeda Jitsugyo Bank. After World War II, Sumitomo, which like other zaibatsu had greatly profited from supplying Japan’s weapon sectors, was broken up into hundreds of smaller companies forbidden to use its former name or trade with the former group members. Furthermore, in 1948, Sumitomo Bank was forced to rename itself the Osaka Bank as it broke ties with the former Sumitomo group of companies.

Interestingly, by 1952, the anti-monopoly laws had already been relaxed that the Osaka Bank restored the name Sumitomo Bank. The bank then actively took up the responsibility of re-grouping the Sumitomo conglomerate. During the 1950s, the bank made a number of highly successful investments, including one in Matsushita Electric (maker of the National and Panasonic brands of electronics and appliances).

In 1965, Sumitomo merged with Kawachi Bank. Still lacking a meaningful presence in the Tokyo region, however, Sumitomo in 1986 acquired the Heiwa Sogo Bank, which operated about 100 branches around the Japanese capital city.

Like other Japanese banks, Sumitomo Bank benefited greatly from the soaring export-led economic growth in the 1970s and 1980s.  Meanwhile, the U.S. government started to adopt a long-running low-dollar policy, which pushed up the value of the Japanese yen, just as Japan was amassing huge trading surpluses. Awash with excess capital and a strong currency, Japan's banks made easy credit to their clients, leading to a period of extreme domestic real estate and stock price inflation. The ever rising prices led to more complacent lending by the banks, creating a vicious speculative cycle, which eventually pushed prices to unsustainable levels. Corporate Japan also made a number of high-profile overseas "trophy" purchases in the late 1980s, including New York City's Rockefeller Center and Columbia Pictures.   The "speculation party" ended abruptly in the early 1990s, when Japan finally raised interest rates to cool the speculation.

The asset price collapse hit Japan's economy and banks extremely hard and total loan losses are said to have amounted to USD $500-billion.

Recent transaction(s):

• In 1990, the Mitsui Bank and the Taiyo Kobe Bank agreed to merge to become the Mitsui Taiyo Kobe Bank. The new bank leapfrogged to become the second largest bank in the country. In 1992, the Mitsui Taiyo Kobe renamed itself Sakura Bank.
• Throughout the 1990s, the banking crisis and economic recession worsened significantly in Japan. Loan losses across the entire banking sector were estimated at USD $500-billion, and the Japanese government provided some USD $400-billion in state aid to prevent a complete collapse of the banking sector. Japan’s economy has experienced minimal real growth from 1990 to 2011, and the Nikkei 225 stock index by mid-2011 remained about 75% below its all-time high reached at the end of 1989.
• In 1999, Sakura Bank agreed to combine with Sumitomo Bank. The actual combination did not complete until 2001. The name Sakura was dropped and the new bank restored part of Sakura's old name Mitsui, creating the current Sumitomo Mitsui Bank. Like many corporate mergers in Japan, the share exchange ratio was unclear and the value of the merger was not disclosed. Thomson Reuters and WSJ Research later valued the deal at USD $45.4-billion, which appeared unreasonably high for two very sick banks.
• In 2004, Sumitomo Mitsui made a competing USD $29.0-billion offer for UFJ Holdings, which resulted from the three-way combination between Sanwa Bank, Tokai Bank and Toyo Trust in 2002. Eventually, however, UFJ Holdings favoured the merger proposal from Mitsubishi Tokyo Financial Group.
• In 2008, Sumitomo Mitsui subscribed to GBP 500-million of new shares issued by Britain’s Barclays plc as part of Barclays' effort to raise fund to acquire Dutch banking giant ABN AMRO Holding. Barclays “luckily” lost ABN AMRO to a tri-bank consortium formed by the Royal Bank of Scotland Group (RBS), Fortis and Banco Santander. The consortium’s ill-timed purchase of the over-priced ABN AMRO led to the nationalization of both RBS and Fortis in 2009.
• In 2009, Sumitomo Mitsui bought Japanese retail broker Nikko Cordial Securities Inc. and other assets from Citigroup for a total cash value of JPY 774.5-billion (USD $7.9-billion). The purchase also included the stock and bond underwriting units of Nikko Citigroup, and JPY 28.5-billion of Japanese-listed securities held by Citigroup.
• In June 2010, Sumitomo Mitsui bought a 4.5% stake in India’s No. 4 bank by market capitalization, Kotak Mahindra Bank, for INR 13.66-billion (USD $296-million).
• In January 2012, Sumitomo Mitsui Financial and trading conglomerate Sumitomo Corp. jointly acquired airliner-leasing firm RBS Aviation Capital from the Royal Bank of Scotland for USD $7.3-billion. Sumitomo Mitsui Financial would take 70% of the Dublin-based business and Sumitomo Corp. would take the rest. RBS Aviation Capital owned, managed or had orders for 329 commercial jet airliners.
• Between May 2013 and March 2014, Sumitomo Mitsui acquired a 40% stake in Indonesia's PT Bank Tabungan Pensiunan Nasional for USD $1.5-billion.  The Indonesian bank had over 1,200 branches and points of sales across the country.
• In March 2015, Sumitomo Mitsui subscribed to HKD $6.6-billion (USD $849-million, JPY 105-billion) worth of new Bank of East Asia shares.  Following the investment, Sumitomo Mitsui's stake in the Hong Kong bank rose to 17.5% from 9.7%.

Click here to return to the Index page.

United States Bank Mergers (PNC Financial Services Group)

Photo: Following the sale of National City to PNC Financial in 2008, the former NatCity branch in Norwalk, Ohio, is now a PNC branch.

The PNC Financial Services Group, Inc.


National City Corporation


In 1845, two executives from the Fireman’s Insurance Co. founded the City Bank of Cleveland. The new bank quickly gained prominence in the city by issuing secured paper banknotes, offering deposit accounts to safely store cash and loans to businesses. Two years after the passing of the National Banking Act of 1863, City Bank of Cleveland converted to a national charter and renamed itself National City Bank of Cleveland.

As one of the inland port cities in the Great Lakes, Cleveland became a major commercial and transportation hub, and National City Bank also prospered. The bank operated on conservative principles, which helped it weather the Panic of 1893, when hundreds of American banks failed.

Like America itself, National City fared well well into the 1920s, until another asset bubble burst led to the infamous Stock Market Crash and the ensuing Great Depression. Despite that, the bank’s cautious management once again steered the bank through the challenges and came out relatively unscathed.

Following the end of the World War II, America enjoyed decades of boom while much of Europe and Asia rebuilt from its ruins. National City launched new products and services. In 1959, a computer system was installed to link its branches together. Still, by 1960, the bank remained largely just a Cleveland city bank with 24 branches. Between 1974 and 1984, the bank acquired a number of small Ohio banks such that by 1980, it operated a network of 111 branches.

National City broke out of its relative confinement in the Cleveland area in 1984, when it took over Columbus-based BancOhio Corp. (BancOhio National Bank) for USD $310-million. The purchase gave National City a major foothold in Ohio’s state capital and made it the No. 1 bank in the state. When the ban on inter-state banking was lifted in the late 1980s, National City made its first out-of-state expansion in 1988 by buying First Kentucky National Corp. for USD $660-million.


The 1990s saw a massive wave of bank consolidations in the U.S. In 1991, National City engaged in a bidding war for Cleveland rival Ameritrust Corp. In the end, National City’s USD $860-million offer was trumped by Society Corp.’s (present-day KeyCorp) USD $1.2-billion offer. The rebuffed National City quickly turned its attention to other opportunities and took over Merchants National Corp. of Indianapolis in the same year.

Following a few small acquisitions in Indiana and Kentucky, National City made a major move into the Pennsylvania market in 1995 by buying Pittsburgh’s Integra Financial Corp. for USD $2.1-billion. Integra operated 260 branches in western Pennsylvania.

By 1997, National City was emerging as a regional powerhouse in the Midwest with 750 branches. In the same year, the bank bought Sterling Ltd., an Ohio wealth management firm. The buying frenzy continued in 1998 when the bank bought the First of America Bank Corporation of Kalamazoo, Michigan, for USD $6.7-billion and Fort Wayne National Corp. of Indianapolis for USD $800-million. The bank closed out the decade by buying California-based subprime (i.e. high-risk) mortgage lender First Franklin Financial from Bank of America in 1999 for USD $266-million. This purchase would turn out deadly for National City a decade later.

After a few years of digesting its earlier acquisitions, National City in 2003 took over Missouri’s Allegiant Bancorp for USD $475 million, obtaining 37 branches in the St. Louis area. One year later, the bank bought Cincinnati-based Provident Financial Group for USD $2.1 billion.


By 2006, the decade-long real estate bubble that had been fuelled by super-low interest rates, loose lending practices and just plain old “herd mentality,” was starting to leak air. As mortgage default rates began to creep up, National City sold its subprime mortgage lender First Franklin to Merrill Lynch for USD $1.3-billion, though the bank had to keep USD $10-billion of the riskiest mortgage assets that Merrill refused to take on. Buying First Franklin turned out to be a big mistake for Merrill, which shut down the lender merely two years later after a multi-billion dollar write-off.


Ironically, at the same time that National City sold First Franklin, it bought two new banks in Florida: Fidelity Bankshares for USD $1-billion and Harbor Florida Bancshares for USD $1.1-billion. Even as late as 2007, the bank bought MAF Bancorp (MidAmeria Bank) for USD $1.9-billion. MidAmerica had 82 branches in Chicago and Milwaukee areas.


Soon after, in early 2008, the global credit bubble burst and banks around the world suffered billions of dollars of losses from bad mortgage and consumer loans. Investment bank Bear Stearns collapsed in March 2008 and was sold to JPMorgan Chase. When panicky institutional investors withdrew from the short-term money market, banks around the world became short of the capital needed to keep their business going. Citigroup, Wachovia, Washington Mutual, Fannie Mae, Freddie Mac, HBOS and Fortis were just a few of a long list of lenders that would have gone bankrupt without emergency state aid. It was clear that National City would not survive without the backing of a healthier bank, and it agreed to a buyout offer from PNC Financial in October 2008.


PNC Financial Services Group

In 1852, the Pittsburgh Trust and Savings Co. opened for business, making it the oldest bank in the city. Following the passing of the National Banking Act of 1863, the bank promptly applied for a national charter and renamed itself the First National Bank of Pittsburgh.


In 1946, First National of Pittsburgh merged with Peoples-Pittsburgh Trust Co. to form Peoples First National Bank & Trust Co. In 1959, Peoples First merged with Fidelity Trust Co. and adopted the name Pittsburgh National Bank.


Meanwhile, a number of Quaker merchants founded the Provident Life and Trust Co. in 1865 to provide life insurance and banking services. Provident Life and Trust was often dubbed the “Quaker Bank.” In 1922, the company was split into the Provident Mutual Life Insurance Co. and the Provident Trust Co. In 1957, the Provident Trust Co. of Philadelphia acquired the Provident Tradesmen’s Bank and Trust Co. to form the Provident National Bank.


It was only in 1982 that the legislative ban on state-wide banking in Pennsylvania was abolished, and Pittsburgh National Bank and Provident National Bank became the first two in the state to merge, forming the PNC Financial Corp. In 1984, PNC bought Northeastern Bancorp for about USD $100-million. As the 1980s progressed, further legislative reforms made inter-state banking legal, and PNC acquired Louisville, Kentucky-based Citizens Fidelity Corp. for USD $700-million in 1986. In 1987, the bank bought the Central Bancorporation of Cincinnati. Just one year later, PNC acquired the Bank of Delaware Corp. for USD $230-million. Though still sporadic outside of Pennsylvania, PNC by this time was already building a network in the Midwest and along the Eastern Seaboard.


Recent transaction(s):

• Between 1991 and 1995, PNC made a series of small acquisitions to expand its operations in its hometowns of Pittsburgh and Philadelphia, as well as in northern Kentucky, northern Pennsylvania and the Cincinnati area.
• In 1993, PNC acquired The Massachusetts Company from the Travelers Group for USD $52-million. Founded in 1818, The Massachusetts Co. offered trust and pension services and had a small branch network.
• Also in 1993, PNC acquired Sears Mortgage from department store Sears, Roebuck & Co. for USD $329-million.
• In 1994, PNC bought BlackRock Financial Management for USD $240-million. BlackRock specialized in fixed-income asset management. In 1999, PNC floated 30% of BlackRock on the stock market.
• In 1995, PNC bought Midlantic Corp. for USD $3.0-billion, entering the southern New Jersey market for the first time and strengthening its presence in Philadelphia.
• Also in 1995, PNC acquired 84 branches in southern New Jersey from Chemical Banking Corp. for USD $504-million.
• In 1998, PNC bought stock broker Hilliard Lyons for USD $275-million.
• Also in 1998, PNC sold its credit-card portfolio with USD $2.9-billion in receivables to MBNA Bank for USD $3.343-billion.
• In 1999, PNC acquired the mutual fund processing services unit of First Data Corp. for USD $1.1-billion.
• In 2000, PNC sold its residential mortgage portfolio to Washington Mutual Inc. for USD $605-million.
• In 2003, PNC bought United National Bancorp for USD $638-million. United National operated 52 branches in central New Jersey and eastern Pennsylvania.
• In 2004, PNC bought Riggs National Corp. for USD $779-million.
• In 2006, BlackRock exchanged a 49.8% stake of itself for Merrill Lynch & Co., Inc.'s investment management business. PNC Financia’s 70% stake in BlackRock was diluted to 34%.
• Also in 2006, PNC bought Mercantile Bancshares Corp. for USD $6.0-billion. Mercantile Bank operated 240 branches in the Washington D.C., Maryland, Delaware, Virginia and south-eastern Pennsylvania areas.
• In 2007, PNC bought Lancaster, Pennsylvania-based Sterling Financial for USD $565-million. Sterling Financial had 67 branches in Pennsylvania, Maryland and Delaware under five banking subsidiaries.
• Also in 2007, PNC bought Hamilton, New Jersey-based Yardville National Bancorp for USD $403-million. Yardville National operated 33 branches in New Jersey and Pennsylvania.
• On 2008-10-24, PNC Financial Services bought National City Corp. for USD $5.2-billion in stock plus USD $384-million in cash to certain warrant holders. The deal valued each National City share at USD $2.23. Just a few years earlier, National City traded at over $30 per share. PNC also announced that it would obtain USD $7.7-billion in state aid (TARP fund) from the U.S. Treasury. National City had 1,300 offices and 2,100 ATMs in Ohio, Florida, Illinois, Kentucky, Indiana, Missouri, Michigan and Pennsylvania. The enlarged PNC would have 2,750 branches but branch closures were expected.
• In 2008, as part of the sale of Merrill Lynch to Bank of America, Merrill’s 48.5% stake in BlackRock was restructured. The change of ownership of Merrill triggered a clause in BlackRock’s shareholder agreement that allows BlackRock to reduce Merrill’s voting control of BlackRock. Merrill Lynch, BlackRock and BlackRock’s other major shareholder PNC would exchange common stock into preferred stock. Following the exchange, Merrill’s voting stake in BlackRock fell from 48.5% to 4.9%; whereas PNC’s voting control in BlackRock rose from 36.5% to 47%.
• In June 2009, BlackRock, an associated company of PNC and Bank of America, agrees to buy San Francisco-based Barclays Global Investors from Barclays plc for USD $13.5-billion (GBP 8.2-billion). BlackRock would pay USD $6.6-billion in cash and issue USD $6.9-billion of new stock to Barclays plc. Barclays ended up with a 19.9% economic interest in the newly-named BlackRock Global Investors, but only a 4.9% voting stake. Bank of America, through its 2008 purchase of Merrill Lynch, saw its economic holding in BlackRock fall to 34.2% from 47%, while PNC’s economic stake was diluted to 24.6% from 32%. The new BlackRock had USD $2.7-trillion of assets under management.
• In 2010, PNC sold PNC Global Investment Servicing the Bank of New York Mellon for USD $2.31-billion in cash. The unit sold provided back-office data and accounting processing for financial advisers, fund managers and brokers. PNC Global Investment Servicing had USD $855-billion in assets under administration. PNC planned to repay the USD $7.7-billion in government bailout fund to the U.S. Treasury. PNC would finance the rest of the repayment from a USD $4.5-billion to $5-billion common share and senior notes sale.
• In June 2011, PNC agreed to buy RBC Bank USA and its credit-card potfolio from Royal Bank of Canada for USD $3.615-billion (CAD $3.54-billion). The purchase included 424 branches in North and South Carolinas, Florida, Alabama, Georgia and Virginia. RBC Bank USA had USD $19-billion of deposits and USD $16-billion of loans. The purchase would turn PNC into the No. 5 bank in the U.S. based on deposits.
• In May 2020, PNC unloaded its roughly 22.4% stake in BlackRock Inc. for USD $14.37-billion (gross) in cash, except for 500,000 BlackRock shares (worth USD $2.1-million) that PNC intended to contribute to the PNC Foundation by the end of the second quarter of 2020.
• In November 2020, PNC agreed to purchase BBVA USA Bancshares, Inc. from Spain's BBVA for USD $11.6-billion in cash. Houston-based BBVA USA had $86 billion of deposits and $66 billion of loans. It operated 637 branches in Texas, Alabama, Arizona, California, Florida, Colorado and New Mexico. By buying BBVA USA, PNC would become the fifth-largest retail bank in the United States. The purchase excluded BBVA Securities, Inc., Propel Venture Partners Fund I, L.P. and BBVA Processing Services, Inc.
• In September 2025, PNC agreed to acquire FirstBank Holding Company, including its banking subsidiary FirstBank, for USD $4.1-billion. FirstBank, headquartred in Lakewood, Colorado, operated 82 branches in Colorado and 13 branches in Arizona, with total assets of USD $26.8-billion.

Click here to return to the Index page.

Ireland Bank Mergers & Acquisitions (Allied Irish Banks)

Photo: Two older Northern Irish (British) pound banknotes issued by the former Provincial Bank of Ireland and Allied Irish Banks. The Irish Republic’s currency was the Irish punt between 1938 and 1998, and the Euro since 1999. Northern Ireland, as part of Great Britain, uses the British Pound Sterling.


Allied Irish Banks, plc (AIB Group)

Allied Irish Banks was formed in 1966 through the three-way merger of the Provincial Bank of Ireland, the Royal Bank of Ireland and the Munster and Leinster Bank. All three founding members were established long before Ireland gained independence from Britain in 1922.


The Provincial Bank of Ireland

Of the three, the Provincial Bank of Ireland was the oldest, having been founded in 1825. Despite its Irish focus, the bank was backed by Scottish investors and had its head office in London.  The Provincial Bank pioneered branch banking in Ireland, and forced the incumbent and much larger Bank of Ireland to quickly follow suit to establish offices outside of Dublin. 

Long an innovative bank, the Provincial was also one of the parties that pushed for the creation of a clearing house in Dublin in 1845. The clearing house was a centralized place where bills of exchange and cheques were swapped and cleared and balances settled amongst the banks. In the second half of the 19th century, the Provincial Bank became closely associated with the burgeoning linen industry in Ireland.

Some 31 years after Ireland gained independence from Britain, the Provincial Bank of Ireland finally relocated its head office from London to Dublin in 1953.


The Royal Bank of Ireland

The Royal Bank of Ireland opened for business in 1836 and initially served mostly the wealthy Protestant merchants. The name “Royal” obviously dated from a time when the entire Ireland was a part of the United Kingdom of Great Britain and Ireland. Following the establishment of the Irish Free State in 1922, a civil war broke out between the pro-Anglo Irish Treaty forces and those against it. It was during this divisive and violent time that Royal Bank of Ireland exchanged its own Northern Irish business for Belfast Banking Company's operations in the Irish Free State.

Interestingly, as the Big Four on the Irish Isle today all started long before Ireland became independent, they have always operated in both the north and the south. Hence, Allied Irish Banks and Bank of Ireland, both based in Dublin, also operate in Northern Ireland. Similarly, Ulster Bank and Northern Bank, both based in Belfast, have major operations in the Republic. The Irish may not agree on religions and politics, on money matters the border doesn't seem to affect their choice of bank. It should be pointed out, however, that Ulster Bank is part of The Royal Bank of Scotland Group whereas Northern Bank is now a subsidiary of Denmark's Danske Bank.


The Munster and Leinster Bank

The Munster and Leinster Bank can loosely trace its origins to the establishment of the Munster Bank in 1864 in Cork.  The southern Irish bank expanded quickly and gained a foothold in Dublin in 1870 when it acquired prominent private bank David La Touche & Son. The La Touches were Huguenots (French Protestants) who fled to the Netherlands in the 1680s and migrated to Ireland with Protestant King William of Orange during the Battle of the Boyne.  The La Touche family established a flourishing weaving business in Dublin and branched into the private banking business in 1713.  The family became major backers of founding of the Governor and Company of the Bank of Ireland in 1783.  In 1870, the family sold their Dublin-based private bank David La Touche & Son to Munster Bank.

In 1885, Munster Bank suffered a devastating bank run following allegations that the bank made un-recoverable loans to its directors.  Following Munster Bank's collapse, the government brokered (but financed by private investors) the creation of Munster & Leinster Bank in 1885, taking over the deposits and branch network of the bankrupt Munster Bank. With its extensive branch network in rural Ireland, Munster and Leinster was the average folks’ choice of bank.


Allied Irish Banks

Despite the creation of Allied Irish Banks in 1966, the Royal, the Provincial and the Munster and Leinster continued to operate under their own names for some years. By 1971, they operated more than 280 branches in Ireland and another 46 in Northern Ireland.

In 1977, Allied Irish Banks opened a branch in New York. Six years later, it acquired a 43% stake in American regional bank First Maryland Bancorp, which operated the First National Bank of Maryland. AIB’s stake in First Maryland was raised to 49% in 1988 at which point the Irish bank launched an offer to fully privatize First Maryland.

In 1990, Allied Irish Banks formally adopted the abbreviation AIB, though in legal matters “Allied Irish Banks” remains in use.

Recent transaction(s):

• In May 1991, AIB purchased TSB Northern Ireland from TSB Bank plc (the former Trustee Savings Bank, see entry under Lloyds Banking Group). Following the purchase, Allied Irish changed the name of its Northern Ireland division to First Trust Bank.
• In December 1991, AIB acquired York Bank & Trust Company in Pennsylvania. The enlarged First Maryland now had branches in Pennsylvania, Delaware and Washington DC.
• Between 1995 and 1997, AIB bought 60.1% of Polish bank Wielkoposki Bank Kredytowy.
• In 1999, AIB bought 80% of another Polish bank Zachodni from the Polish state treasury.
• Also in 1999, AIB acquired 24.9% of Keppel TatLee Bank of Singapore.
• In 2001, AIB’s Polish holdings were combined to form Bank Zachodni WBK, the 5th largest bank in Poland, in which AIB had a 70.5% stake.
• Also in 2001, AIB sold its stake in Singapre's Keppel TatLee Bank to Oversea-Chinese Banking Corp (OCBC).
• In February 2002, AIB's U.S. unit Alltrust Financial discovered that currency trading losses totalling USD $750-million had been run up by a rogue trader named John Rusnak. Mr. Rusnak apparently hid the losses by falsifying bank records. The resulting scandal caused Allied Irish's share prices to tumble. Later in 2002, AIB decided to merge (sell) its Alltrust Financial unit with Buffalo-based M&T Bank in exchange for a 22.5% stake in M&T, plus USD $865-million in cash. The whole deal put a value of about USD $3.1-billion on Alltrust Financial.
• In 2007, AIB bought AmCredit for Eur 40-million. AmCredit was a mortgage lending specialist in the Baltic region and operated 13 outlets across Latvia, Lithuania and Estonia.
• In 2008, AIB bought 49.99% of Bulgaria's Bulgarian-American Credit Bank AD (BACB) for Eur 216-million (USD $318-million). BACB specialized in providing secured financing to small- and medium-sized enterprises. It had four offices and a mobile staff of 130 employees to cover another 15 cities.
• Following the collapse of the U.S. housing market in 2007, losses from the collateralized debt obligations (CDOs) soared to billions of dollars around the world, and the inter-bank credit market froze during the summer of 2008. As funding sources dried out, some of the world’s largest banks were on the verge of collapse, including Citigroup, Wachovia, Washington Mutual, HBOS (Halifax-Bank of Scotland), Royal Bank of Scotland, Fortis and all three of Iceland’s commercial banks. Ireland’s Allied Irish Banks, Anglo-Irish Bank and Bank of Ireland were no exception and certainly would have gone down without state aid.
• On 2008-09-30, the Irish government had to offer a sweeping guarantee covering all deposits and loans at six major Irish banks (including AIB) to prevent a panic run on the banks. The unconditional state guarantee would be effective at least until the end of September 2010.
• In December 2008, the Irish government announced plans to recapitalize the three largest Irish banks for Eur 5.5-billion. The government offered AIB Eur 3.5-billion (USD $4.92-billion, GBP 3.26-billion) in return for perpetual preference shares with an annual yield of 8%. The purchase gave the government a 25% indirect stake of AIB.
• In mid 2009, the Dublin government announced the creation the National Asset Management Agency (NAMA) to take the bad loans off the books of distressed Irish banks. NAMA planned to buy between Eur 20-billion to 25-billion of AIB’s bad loans at a significant discount. The resulting loan loss would require AIB to raise more capital from the Irish state or private investors.
• In September 2009, NAMA unveiled plans to pay a number of Irish financial institutions Eur 54-billion (USD $79.5-billion) to unload Eur 77-billion (USD $113.4-billion) of bad loans from their books. The financial institutions would record losses of 30% of the loans. However, as the poor quality of the loans was revealed in 2010, the Irish government significantly lowered the percentage that it offered to take over the bad loans during 2010.
• In March 2010, the Central Bank of Ireland published its Prudential Capital Assessment Review (PCAR), which required AIB to raise Eur 7.4-billion in addition to the proposed sales of AIB’s bad loans to NAMA, as well as the proposed sales of AIB’s Polish and American operations. The amount of additional fresh capital requirement was further raised to Eur 9.8-billion in November 2010.
• In April 2010, AIB transferred its first tranche of bad loans to NAMA. AIB received Eur 1.9-billion for loans with a book value of Eur 3.3-billion, representing a “haircut” of 42%.
• In July 2010, AIB transferred its second tranche of bad loans to NAMA. AIB received Eur 1.4-billion for loans with a book value of Eur 2.73-billion, representing a “haircut” of 49%.
• In September 2010, AIB sold its 70.4% stake in Poland’s Bank Zachodni WBK S.A. and 50% stake in BZWBK AIB Asset Management to Banco Santander for Eur 3.09-billion (USD $3.97-billion). Bank Zachodni WBK was Poland’s No. 3 bank and had 512 offices. The sale generated Eur 2.5-billion of tier 1 capital for the troubled Irish bank.
• In October 2010, AIB sold its 22.4% stake in U.S. regional bank M&T Bank Corp. for USD $2.07-billion (Eur 1.5-billion). The sale raised AIB’s tier 1 capital by Eur 900-million.
• Between 2010-06-30 and 2010-11-16, a total of Eur 13-billion (UD$ 18-billion) of deposit was withdrawn from AIB, mainly due to wary corporate and institutional clients transferring their cash away from the debt-crippled bank.
• Between November and December 2010, AIB transferred two more bad-loan portfolios to NAMA. AIB received Eur 5.1-billion for loans with a book value of Eur 12.5-billion, representing a “haircut” of 59%.
• On 2010-12-23, the Irish government injected Eur 3.7-billion (USD $4.85-billion) into AIB to raise its stake from 18.6% to 49.9%. The government also planned to exercise its Eur 3.5-billion of convertible non-voting stock in the bank in early 2011, raising its ownership to 92.8%, effectively nationalizing Ireland’s largest bank. AIB still needed to raise another Eur 6.1-billion by the end of February 2011 to meet its Eur 9.8-billion fresh capital requirement. As part of the restructuring, AIB’s stock listing would move from the Irish Stock Exchange’s main board to the Enterprise Securities Market as of 2011-01-26.
• In February 2011, Allied Irish Banks (AIB) paid Eur 3.5-billion (USD $4.81-billion) to acquire Eur 8.6-billion (USD $11.78-billion) in deposits and Eur 12.2-billion (USD $16.78-billion) in NAMA bonds held by Anglo Irish Bank. The purchase price basically represented the value differential between the total deposits and the NAMA bonds. In addition, AIB also bought Anglo Irish's Isle of Man unit for Eur 200-million. The government-brokered deposit sale was a major step to wind down the bankrupt Anglo Irish Bank, which lost Eur 12.7-billion in the 15 months ending on 2009-12-31 and another Eur 17.6-billion in fiscal 2010 from non-performing commercial real estate loans.
• In June 2021, AIB agreed to pay EUR 4.1-billion in cash to acquire EUR 4.2-billion of corporate and commercial loan book from NatWest Group's Ulster Bank unit. NatWest had decided to exit the Republic of Ireland market. The purchase price represents 97.63% of the par value of the loan portfolio.
• In June 2022, AIB further agreed to pay EUR 5.4-billion to acquire EUR 5.7-billion of performing tracker mortgages (representing 47,000 loans) from NatWest Group's Ulster Bank subsidiary. The purchase price represents 95.15% of the par value of the loan portfolio.
• .

Click here to return to the Index page.