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| Riggs National Bank on Pennsylvania Avenue in Washington, DC. Riggs National has finally come to a deal with PNC Financial Services Group after months of disputes over changes made to the initial deal last July |
Riggs National has agreed to accept a reduced take over bid from the PNC Financial Services Group. The deal, announced yesterday comes only three days after Riggs filed a lawsuit against the Pittsburgh based bank for failing to complete a merger. The banks announced yesterday that they had resolved their differences and now plan to merge as soon as possible.
Under the revised deal PNC will pay $20 a share, or about $652 million, to acquire Riggs, a significant reduction on PNC’s original offer of $24.25 a share or $779 million made last July.
According to the suit, which Riggs has since agreed to withdraw, the negotiations fell apart because PNC wanted to revise the original offer and pay $19.32 a share.
PNC's offer in July was made shortly after the release of a Senate report which suggested the possibility of illicit deals from Equatorial Guinea involving government and personal accounts at a Riggs unit, as well as years of suspicious dealings with Chile's former dictator, Gen. Augusto Pinochet.
On Jan. 27, Riggs's banking subsidiary, Riggs Bank, pleaded guilty to criminal charges of failing to monitor suspicious financial transactions adequately and agreed to pay a $16 million fine to settle the Justice Department investigation. The investigation, which is continuing, has yet to result in charges against any senior executives or managers at Riggs, but the settlement permitted Riggs Bank and its parent company to avoid prosecution.
Last May, Washington based Riggs paid a $25 million civil fine imposed by the Treasury Department for failing to supervise accounts responsibly.
Merger talks failed when the PNC wanted to revise the original terms in light of the damage caused by the money-laundering investigation. PNC expressed concern this week that unforeseen financial and legal problems had surfaced at Riggs since July, convincing it that the original terms needed to be revised.
The new PNC-Riggs agreement authorizes either side to terminate the deal if it is not completed by May 31.
In a statement PNC’s Chief Executive James E. Rohr said “We are looking forward to our entry into the extremely appealing Washington, D.C. marketplace, and we are confident that the Riggs franchise will provide us with an excellent platform from which to grow,''
''We have assessed the remaining risks to Riggs, and we believe we have reached a revised agreement that is fair to all parties.''
PNC is buying an operation with a reputation that has been damaged by the money-laundering scandal. Riggs announced on Monday that it lost $60 million in the fourth quarter of 2004 and about $100 million for the year.
While the bank retains a promising consumer banking presence in Washington, components of its once prestigious international and embassy banking businesses are being closed or sold.
