Mechanics Bank acquires Rabobank NA for $2.1bn as banking M&A around the world ramps up.
Specifically, Mechanics is snapping up Rabobank’s US retail, business banking, mortgage and wealth management businesses.
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The Dutch lender is holding on to its food and agriculture loan portfolio. Rabobank aims to grow its food and agri business in the US following Mechanics deal.
Mechanics Bank is headquartered in California. It currently operates 44 branches and has more than $6bn in assets. Rabobank NA is a much larger operation and has a 100 branch strong network and over $13bn in assets.
Mechanics Bank acquires Rabobank NA: forms $17bn assets, 144 branch lender
The newly enlarged Mechanics Bank will operate under the Mechanics brand name. Rabo’s US food and agri assets are transferring to its RaboAgriFinance unit based in Missouri.
As part of the deal, Rabo is to receive a 9.9% stake in Mechanics Bank.
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By GlobalData“Bringing Rabobank NA together with Mechanics Bank gives us a great opportunity to fill an established gap between the big banks and smaller community banks throughout the state,” says John DeCero, President and CEO of Mechanics Bank.
“We are two established institutions with values and principles that align closely. There’s very little geographic overlap and significant potential for value creation for both parties.”
Mark Borrecco, CEO of Rabobank NA adds: “This is a unique opportunity to merge two high-performing consumer and commercial banks with common values and deep roots in California.
“Both organisations take pride in putting their customers first and possess a strong sense of community.”
The transaction is expected to close in the third quarter of 2019.
Rabobank is one of three lenders that dominate its domestic Dutch home market along with ING and ABN AMRO.
Rabobank made €3bn in net profit over 2018. It also holds 101 local Rabobanks, 409 offices in the Netherlands and employs over 41,000 full time employees. This is to serve 8.3 million customers worldwide, 7.3 million of them located in the Netherlands.
