Moody's affirms PNC, may upgrade RBC Bank

Moody's Investors Service said it affirmed the ratings and positive outlook on PNC Financial Services Group, Inc. and its subsidiaries following news that it has agreed to acquire RBC Bank (USA).

PNC has an A3 long-term senior debt rating and its funding subsidiary, PNC Funding Corp., has a prime-2 rating for short-term obligations.

PNC's operating bank subsidiary, PNC Bank, NA, has an A2 long-term scale rating, A2 long-term deposits rating and prime-1 rating on its short-term obligations.

Moody's also said it placed RBC Bank (USA)'s Baa2 long-term scale rating on review for possible upgrade, while its A1 senior debt and deposit ratings are on review for possible downgrade. RBC Bank's prime-1 short-term rating was affirmed.

RBC Bank (USA) is the U.S. retail banking arm of the Royal Bank of Canada.

These actions follow news that PNC will acquire RBC Bank in a transaction scheduled to close in the first quarter of 2012, Moody's said.

Moody's noted the modest size of RBC Bank relative to PNC and its healthy financial fundamentals and proven acquisition track record.

In acquiring RBC Bank, PNC is buying an underperforming franchise and it will need to commit substantial resources to it in order for it to be a long-term attractive opportunity, the agency added.

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