Mechanics Bank has agreed to acquire US chartered bank Rabobank, National Association (Rabobank, N.A.) from Dutch banking group Rabobank Group for about $2.1bn.
Image: Rabobank Group to offload Rabobank, N.A. to Mechanics Bank. Photo: courtesy of Rabobank.
Based in Roseville, California, Rabobank, N.A. operates 100 branches and has more than $13bn in assets. The bank, which has more than 1,500 employees, offers a variety of financial products and services for individual, business, and food-and-agribusiness customers.
Mechanics Bank, on the other hand, is a California-based community bank with 44 branches located throughout the state. The community bank holds than $6bn in assets.
The community bank offers consumer and business banking services, commercial lending, cash management services along with trust, investment and wealth management services.
The transaction will include Rabobank, N.A.’s retail, business banking, commercial real estate, mortgage, and wealth management businesses. It will exclude food and agribusiness assets of the chartered bank, which will be transferred to its Missouri-based affiliate, Rabo AgriFinance.
For Rabobank Group, the sale of Rabobank, N.A. is expected to simplify and boost its operations in North America while creating the fourth largest agricultural lender in the US.
Rabobank, N.A. CEO Mark Borrecco said: “This is a unique opportunity to merge two high-performing consumer and commercial banks with common values and deep roots in California.
“Both organizations take pride in putting their customers first and possess a strong sense of community.”
Post-transaction, the combination of the two banks will operate under the Mechanics Bank name, and will have 144 branches and more than $17bn in total assets.
Rabobank Group will hold a stake of 9.9% in the combined entity, as part of the total consideration of the transaction. As of now, Ford Financial Fund II holds 79% stake in Mechanics Bank.
Mechanics Bank president and CEO John DeCero said: “Bringing Rabobank, N.A. 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.
“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 to this combination, and we believe that the new Mechanics Bank will be able to leverage our common strengths at a scale that will benefit all of our clients, our shareholders, and the communities we serve.”
The deal, which will be subject to regulatory approvals and other customary closing conditions, is anticipated to be completed in the third quarter of 2019.