Oriental secures regulatory clearance for acquisition of BBVA’s Puerto Rican operations

BBVA Building

Puerto Rican financial holding company Oriental Financial Group Inc (NYSE:OFG) said it had secured all needed regulatory approvals to acquire the local operations of Spanish lender Banco Bilbao Vizcaya Argentaria SA (MCE:BBVA; NYSE:BBVA) for USD500m (EUR382.6m) in cash.

The deal, which was announced at the end of June, is expected to be finalised by the end of this year. It is seen to result in the creation of the second largest bank in Puerto Rico in terms of branches and core deposit funding and the third biggest in terms of assets.

The buyer previously said that it had received proceeds of USD84m via a private placement of preferred stock with institutional investors and that it would raise a total of USD150m in Tier 1 capital to fund part of the deal. It will cover the remaining portion of the purchase price with existing cash.

The transaction is expected to boost the buyer’s earnings per share by 35% in 2013 on a pro forma basis and by some 52% in 2014. The annual cost savings are projected at around 20% of BBVA PR’s non-interest expenses. Oriental also expects to incur USD40m in one-time restructuring charges related to the deal.

As of the end of Match 2012, BBVA PR had some USD5.2bn in assets, USD3.7bn in loans and USD3.3bn in deposits. It employed some 950 people at 36 branches.

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