Takeaways
- PNC Bank (PNC) on Tuesday acquired $16.6 billion in capital commitments, primarily loans, held by Signature Bridge Bank, the successor to bankrupt Signature Bank.
- The commitments will be transferred from a bridge bank created by FDIC regulators. following the collapse of Signature Bank in March.
- PNC shares were hit hard during this year's banking crisis and are still down about 25% year to date.
PNC Bank (PNC) took in $16.6 on Tuesday. billion euros in capital commitments, primarily loans held by Signature Bridge Bank, with the Federal Deposit Insurance Corp. (FDIC). The bridge bank was created by federal regulators in March after the collapse of the bank of the same name.
More than half, or $9 billion, of the portfolio is comprised of funded loans, primarily in the form of lines of credit extended to private equity (PE) firms. By accepting these lines of credit, designed to help private equity firms manage their liquidity and finance their investments, PNC could expand its range of offerings to private equity clients.
The transaction is expected to add to the profit of PNC, or about 10 cents per share in the fourth quarter, and will likely have little effect on the bank's capital ratios and book value.
Signature Bank, a now-defunct regional bank based in New York, was one of two prominent lenders that failed in March during this year's banking crisis. It was shut down by federal regulators on March 12, two days after Silicon Valley Bank (SVB) suffered the same fate, sparking fears of contagion within the regional banking sector. The same day, in an effort to protect depositors, the FDIC transferred most of Signature Bank's assets to a bridge bank.
Shortly before its collapse, Signature The bank ranks ranked 29th in the country, with assets exceeding $110 billion. Some of its biggest clients included cryptocurrency companies and startups.
The banking crisis hit the Shares of regional lenders struggled, and PNC was not immune. Shares of the Pittsburgh-based lender were down 30% in May. Although there has been some recovery, PNC shares have struggled since then and are still down about 25% year to date.
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Source: investopedia.com