For Immediate Release
Chicago, IL - December 21, 2011 - Zacks.com announces the list
of stocks featured in the Analyst Blog. Every day the Zacks Equity
Research analysts discuss the latest news and events impacting
stocks and the financial markets. Stocks recently featured in the
blog include
HSBC Holdings Plc
(
HBC
),
PNC Financial Services Group Inc.
(
PNC
),
Royal Bank of Canada
(
RY
),
Flagstar Bancorp Inc.
(
FBC
) and
BankAtlantic Bancorp Inc.
(
BBX
).
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free Profit from the Pros newsletter:
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Here are highlights from Tuesday's Analyst Blog:
China
Tries Deflating Realty Bubble
The Chinese government is attempting to calm the country's
overheated property market. Goaded by measures such as ownership
restrictions on property and taxes, home prices declined in big
cities in November. But this is also a tell-tale sign of China's
flagging growth. China's Central Bank had recently lowered the cash
reserve ratio to help commercial banks push lending and revive the
economy.
Last month, the World Bank identified four major risks to
China's financial markets in its Financial Sector assessment. Two
of these were disintermediation or lending outside the formal
banking sector and high real estate and commodity prices.
Non-formal lending is partly to blame for the real estate asset
bubble.
The second largest economy in the world after the US, China is
projected to grow at 8.8% in 2012, but less than 9.3% in 2011. The
Asian Development Bank had earlier projected a growth rate of 9.1%
for 2012. China had grown at 9.7% since Deng Xiaoping's market
reforms began in 1978-79. Growth accelerated to 11% during 2003-07.
Between 2008 and 2009, the average GDP growth was 9.4%. In 2010,
China grew by 10.3%.
In recent times, the Asian powerhouse's economic activity has
been fragile. The Purchase Managers Index (
PMI
) of
HSBC Holdings Plc
(
HBC
) for China's Services sector fell to 52.5 in November from 54.1 in
October - the slowest in three months.
China's official PMI for the non-manufacturing sector touched
49.7 in November, significantly below 57.7 recorded in October
according to the China Federation of Logistics and Purchasing. The
country's official manufacturing index declined to 49.0 in November
from 50.4 in October.
Fed Nod to PNC-RBC Deal
PNC Financial Services Group Inc.
(
PNC
) received the approval from the Federal Reserve to acquire RBC
Bank (
USA
), the U.S. retail banking subsidiary of
Royal Bank of Canada
(
RY
). The approval takes PNC Financial a step nearer the completion of
the deal, slated for the first quarter of 2012.
In June 2011, PNC Financial announced its plan to purchase RBC
Bank (
USA
) for $3.45 billion. The acquisition would help PNC Financial to
expand its footprint in the Southeast markets. It would also make
PNC Financial the fifth among U.S. banks, with 2,870
branches. PNC Financial expects the acquisition to be
immediately accretive to earnings (excluding integration costs)
upon closing.
Recently, PNC Financial has been notified that the Board of
Governors of the Federal Reserve System had no objection to the
proposed revisions to the capital actions submitted by the company
as these pertain to the acquisition of RBC Bank (
USA
).
Accordingly, the company does not plan to issue any share of PNC
common stock as part of the consideration payable to Royal Bank of
Canada at closing, or to repurchase any PNC Financial common share
in 2011.
PNC in Expansion Mode
Of late, PNC Financial completed acquiring the 27-branch retail
bank franchise in Georgia from Flagstar Bank, a subsidiary of
Flagstar Bancorp Inc.
(
FBC
). Flagstar Bank sold the leases associated with the branches and
the associated businesses and retail deposits worth approximately
$210 million at the closing. PNC paid the Bank net book value
of the acquired real estate plus fixed and other personal assets
associated with the branches. The deal is a strategic fit for PNC
Financial as it will expand operations in Atlanta and add to its
competitive edge.
With over 70 branches located in the Atlanta metro area,
including those that it plans to add from its pending acquisition
of RBC Bank (
USA
), this purchase would aid in expanding its retail banking
business. It would also leverage its corporate banking and wealth
management prospects.
In mid-2011, PNC Financial also completed the acquisition of 19
branches from a subsidiary of
BankAtlantic Bancorp Inc.
(
BBX
). Additionally, two related facilities in the Tampa - St.
Petersburg area and associated deposits were also handed over to
PNC as part of the sale.
Our Take
PNC's continued strengthening of balance sheet, with focus on
risk and expense management, should propel its earnings ahead.
Benefits from the 2008 National City acquisition continue to exceed
the company's expectations. We also believe that the company's
latest acquisition spree would be accretive to its revenue.
Yet, the top-line headwind is expected to remain in the near
term, with continued soft demand for loans and a low interest rate
environment. Regulatory issues also remain a concern.
PNC shares maintain a Zacks #3 Rank, which translates into a
short-term Hold recommendation. Considering its fundamentals, we
also have a Neutral recommendation on the stock.
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BANKATLANTIC -A (
BBX
): Free Stock Analysis Report
FLAGSTAR BANCP (
FBC
): Free Stock Analysis Report
HSBC HOLDINGS (
HBC
): Free Stock Analysis Report
PNC FINL SVC CP (PNC): Free Stock Analysis
Report
ROYAL BANK CDA (RY): Free Stock Analysis Report
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