The price tag on BBVA's American franchise amounts to about 30 times its projected earnings in 2021, according to analysts at UBS, a bank.That is a lot for a unit that has long underperformed, posting returns on equity of around 6-7%(BBVA's Mexican arm, which is comparable in terms of risk-weighted assets, routinely produces returns of 20% or more).But PNC has demonstrated a knack for turning round ailing ventures, notably the American arm of RBC, a Canadian bank, which it snapped up in 2012.Investors seem confi- dent PNC can repeat the trick: the bank's share price rose by 3% on the day the deal was announced.BBVA's investors were even more enthusiastic. Its share price jumped by 20% on the day.Britta Schmidt of Autonomous, a research firm, estimates the net value gained at about 8bn Euros ($9.5bn), or 40% of the bank's market capitalisation.The sale will shore up its core-capital ratio by nearly three percentage points, to 14.5%, well above the level demanded by regulators.A chunk of the bounty may go towards acquisitions closer to home, fuelling a long-awaited wave of consolidation in Europe's overbanked markets.
