Summary:
- The Bank of California acquires PacWest Bank Corp in an all-stock deal, creating a premier California business bank.
- PacWest underwent a series of strategic moves, including asset and real estate loan sales, leading up to the merger.
- Warburg Pinkers and Centerbridge Parker Centerbridge partners contribute 400 million of new equity to the deal.
- Bank of California, being smaller in size, surprises the market with its role as the legal acquirer.
The Bank of California is set to acquire PacWest Bank Corp in an all-stock deal, creating a premier California business bank. The merger has been confirmed, with PacWest going through a series of strategic moves, including selling assets and real estate loans, before culminating in this unexpected deal with the smaller Bank of California.
Back in May, PacWest announced its consideration of strategic options and the possibility of attracting potential investors. Over time, it undertook the selling of assets and real estate loans, paving the way for today's merger announcement. Bank of California, although smaller, will be the legal acquirer in this complex deal. The involvement of Warburg Pinkers and Centerbridge Parker Centerbridge partners, injecting 400 million of new equity, adds to the intricacies of the arrangement. The banks have plans to sell assets to repay approximately 13 billion of borrowings.
The merger comes as a surprise to many due to the significant difference in size between the two banks, with Bank of California being only a quarter of the size of PacWest. The ripple effects of the regional bank crisis in March, which some attributed to the Fed's rate tightening cycle, still linger in the markets. However, with the expectation that the rate tightening cycle may soon come to an end, the merger marks a notable development in the banking landscape.