The Fed released its order approving PNC Financial’s acquisition of RBC Bank, Raleigh, NC from RBC USA Holdco, a wholly owned subsidiary of the Royal Bank of Canada. After the acquisition, PNC plans to merge RBC Bank with and into its only subsidiary, PNC Bank.

The following was excerpted from the Fed order approving the transaction:

On consummation of the proposal, PNC Bank would become the fifth largest depository organization in the U.S., with consolidated deposits of $201 billion, representing approximately 2.2% of the total amount of deposits of insured depository institutions in the U.S., which the Fed said is $8.9 trillion based on latest available data.

In considering the financial factors of the proposal, the Board said PNC and PNC Bank are well capitalized and would remain so on consummation of the proposed acquisition. The proposed transaction is structured as a stock purchase of all the shares of RBC Bank (and the related credit card portfolio of RBC’s Georgia bank affiliate), for a total payment of $3.6 billion. The purchase would be financed with the proceeds from $1 billion of non-cumulative preferred stock, $1.25 billion of five-year subordinated debt that was issued in the third quarter of 2011, and other available cash resources. Although capital ratios would decline upon consummation, PNC and PNC Bank would have capital ratios well above the established regulatory minimums.

In addition, PNC has been performing capital stress testing since the second quarter of 2009. Under its most recent testing, PNC Bank projected that it would be able to maintain a baseline tier 1 common equity ratio at a level acceptable to the Board. Based on its review of the record, the Board finds that PNC has sufficient financial resources to effect the proposal.

Based on all the facts of record, the Board has concluded that consummation of the proposal would not have a significantly adverse effect on competition or on the concentration of resources in any relevant banking market and that competitive considerations are consistent with approval.

To read the full text of the Fed order approving PNC acquisition of RBC Bank, Raleigh: click here.