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PNC Financial Services Group Inc.'s announcement it would acquire an equipment finance portfolio indicates that bank buyers continue to be interested in the space while nonbank lenders increasingly find it difficult to compete.
PNC agreed to acquire the U.S.-based equipment finance business from Toronto-based ECN Capital Corp. for about $1.25 billion. The deal includes a $1.1 billion portfolio of construction, transportation, industrial, franchise and technology loans and leases. It is expected to be modestly accretive to earnings.
In a press release, the bank said the deal will enhance the existing vendor franchise through a national platform. It could add between 2 cents and 3 cents to PNC's earnings, but could be 40 cents, or 0.5%, dilutive to tangible book value, wrote Keefe Bruyette & Woods analyst Brian Klock in a Feb. 21 report. He called the deal "minor" but said it should complement the bank's existing leasing business.
"Additionally, it shows management's comfort with growing the commercial businesses this year, which is...