PNC Financial Services Group will buy Royal Bank of Canada's U.S. retail bank operations and credit card business for $3.62 billion, expanding the bank into the U.S. Southeast.  The cash-and-stock deal may be the start of a new consolidation wave among U.S. regional banks.  Mid-sized banks are buying competitors to expand into new markets and add customer deposits, allowing them to grow.  RBC Bank (USA) has $25 billion of assets and 424 branches in 6 U.S. states in the Southeast.  As of 3/31/11m PNC had 2,446 branches and $259.38 billion of assets.

Regional banks are acquiring even as the biggest banks, including JPMorgan Chase & Co (JPM.N), are saddled with regulatory woes and housing-related losses that limit their ability to jump into deals.

RBC Sheds Money Loser.   RBC's U.S. bank was a money-losing operation, but PNC may be able to turn it around by winning more business and corporate clients in the region, dominated by strong U.S. national and regional banks including Bank of America Corp and BB&T Corp.  James Westlake, RBC's international banking and insurance head, said the Toronto-based bank sold the unit because it lacked the scale to accomplish what the bank wanted to do in the United States.

RBC said it will continue to provide banking services to RBC Wealth Management and RBC Capital Markets in the United States.  The sale includes the bank, which RBC is selling for $3.45 billion, and a U.S. credit card business, which RBC is selling for $165 million.

The Canadian bank expects the deal to result in a loss of C$1.6 billion ($1.63 billion), which will be recorded in the current quarter. The figure includes an estimated goodwill write-off of C$1.3 billion.  RBC, Canada's largest bank, is offloading the business as some of its rivals are expanding in the United States.   [Reuters, 6/20/11]