Trust business is hidden gem in PNC's Riggs deal

[seemslikeadream]

Thursday, July 22, 2004

By Patricia Sabatini, Pittsburgh Post-Gazette


Long the bank of local blue bloods, Riggs is thought to have the largest trust unit in the Washington region, while PNC, which bolstered its formidable trust ranking with the purchase of Philadelphia's Provident National Bank back in 1982, likely has the biggest trust operation in the mid-Atlantic states. Both also have good reputations in the business.

"On that combination alone, the deal has to be attractive," said Arnie Danielson, a veteran banking consultant in Rockville, Md., who has been a leading critic of other aspects of the acquisition, such as Riggs' relatively weak position in the consumer banking arena and the fact that PNC is taking on a company embroiled in a money-laundering scandal.

Still, the trust business can be tricky. Despite its prowess, PNC will face challenges integrating such a long-standing operation -- Riggs dates back to 1836 -- that people have come to trust.

Trust departments manage assets for people's intended beneficiaries. Wealthy people tend to favor trusts to pass on their assets while minimizing gift and estate taxes.

But trust clients can be a finicky bunch, more sensitive to change than other bank customers, said Robert Wolf, a trust and estate attorney with Tener, Van Kirk, Wolf & Moore, Downtown.
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http://www.post-gazette.com/pg/04204/349817.stm

[seemslikeadream]

1. The PNC-Riggs deal: Propriety & prudence

Tuesday, July 20, 2004


PNC Financial Services Group will spend $779 million to buy the scandal-ridden Riggs National Corp. of Washington, D.C. But will the Pittsburgh banking giant expend too much of its reputation, already challenged, and risk too much cash in the process?
Riggs, once the bank of blue bloods and presidents that financed the Mexican-American War and the purchase of Alaska, has become an industry pariah for purportedly laundering the cash of foreign thugs and royalty. And the federal investigations are not over.

Riggs will sell off its international business, which handled offshore trusts and those pesky international money transfers that earned it the wrath of regulators. Its embassy banking unit will be dissolved. PNC Chairman and CEO Jim Rohr says the Riggs of today will not be the Riggs that PNC acquires.

And, Mr. Rohr notes, PNC has many months to close the deal; it can walk away from it if any more nastiness crawls out of the woodwork. But to do so, it would have to pay a $30 million premium. And it will have to cover the legal bills of any Riggs officials charged in civil lawsuits.
PNC is attempting to put a serious accounting scandal behind it. Indeed, it will expand into a lucrative market, but on the back of the remnants of what one analyst says was a very poorly managed Riggs operation.

Some have speculated that PNC wants to acquire Riggs to show it's still a "player." A prudent player or a gambler is the question.
http://pittsburghlive.com/x/tribune-review/opinion/archive/s_204145.html