Banc of California and PacWest to merge, raise $400 million in equity
By Niket Nishant and Nupur Anand
(Reuters) -Banc of California and PacWest Bancorp will merge in an all-stock deal to create a bank with $36 billion in assets, the companies announced on Tuesday.
The lenders also raised $400 million in equity from investors managed or advised by Warburg Pincus and Centerbridge Partners.
The combined bank will have $25.3 billion in total loans and more than 70 branches in California. It will be based in Los Angeles and led by Banc of California (NYSE:BANC) CEO Jared Wolff, who previously served as PacWest's general counsel.
Shares of PacWest plunged 27%, while Banc of California surged 10% after the Wall Street Journal reported news of a potential deal, citing people familiar with the matter.
PacWest was among the lenders that was rocked by the collapse of three regional banks earlier this year, prompting the worst industry turmoil since the 2008 financial crisis.
«Both the banks are in the same geographies, are focused on commercial assets and so this could be seen as a marriage of convenience,» Timothy Coffey, an analyst at Janney Montgomery Scott, said before the deal was announced.
Treasury Secretary Janet Yellen had said in May that more mergers among midsize U.S. banks could be necessary after a series of bank failures.
PacWest has been signing deals to shed some assets and strengthen its balance sheet. Last month, it said it would sell a $3.54 billion lender finance portfolio to asset manager Ares Management (NYSE:ARES).
While the turbulence at regional banks has abated and lenders have stemmed deposit outflows, there remain concerns that some lenders may still be struggling.
The deal marks a rare transaction in the market after several months of government-negotiated sales of
Read more on investing.com
