(RALEIGH) -- Royal Bank of Canada (RY on TSX and NYSE) today announced that it is refocusing its U.S. growth strategy by entering into definitive agreements by which RBC will sell its U.S. regional retail banking operations to the PNC Financial Services Group, Inc. (PNC), for approximately US$3.62 billion consisting of US$3.45 billion for the purchase of RBC Bank (USA) and US$165 million for the purchase of related credit card assets. The purchase price is comprised of cash and PNC common stock of up to US$1 billion at PNC's option.

"RBC remains fully committed to the U.S. market and this transaction allows us to focus our U.S. efforts on continuing to grow our two largest U.S. businesses, RBC Wealth Management and RBC Capital Markets," said Gordon M. Nixon, president and chief executive officer, RBC. "In addition, we will maintain our existing cross-border banking platform for current and future clients with a targeted suite of cross-border products and services to meet their needs."

"We have built global capabilities and market-leading businesses in RBC Wealth Management and RBC Capital Markets and are committed to leveraging our strengths to invest in these and other high-return businesses," said Mr. Nixon. "We continue to actively deploy our capital where we believe we can generate the highest returns."

"PNC is a market-leading organization that can build on the recent improvements we have made in operations and effectively serve clients as the market returns to more stable conditions," said Jim Westlake, group head, International Banking and Insurance, RBC. "We are pleased that this is the best outcome for all of our stakeholders."

RBC expects the transaction to result in an estimated loss of C$1.6 billion under Canadian generally accepted accounting principles (GAAP) on an after-tax basis, which includes an estimated goodwill write off of C$1.3 billion (C$1.4 billion pre-tax). The estimated loss will be recorded in the current quarter. The purchase price is subject to an adjustment at close for actual net tangible asset value delivered, which is not expected to have a material impact on the loss. All amounts are based on estimates and are subject to change.

Had this transaction taken place as at April 30, 2011, on a pro forma basis, RBC's Tier 1 capital and Tier 1 common equity ratios would have improved by approximately 140 bps and 100 bps respectively. This transaction is expected to be accretive to earnings in 2012. All amounts are based on estimates and are subject to change.

The transaction is subject to customary closing conditions, including regulatory approval, and is expected to close in March of 2012. RBC Capital Markets is the 11th largest global investment bank by fees according to Bloomberg.