PNC Deal to Buy Riggs Seen in Jeopardy

NEW YORK – Riggs National Corp. shares fell Monday as more concerns surfaced that an ongoing money-laundering probe of the Washington, D.C. bank will scrap plans by PNC Financial Group Inc. to acquire it.

PNC announced in July it would spend about $779 million in cash and stock to acquire Riggs, the 179-year-old financial institution that specializes in international and embassy banking services. But it was those very operations that caused the federal government to impose a $25 million fine on allegations it hid assets of former Chilean dictator Augusto Pinochet, among other questionable transactions.

The acquisition includes a provision that would allow PNC to get out of the deal if Riggs faced further regulatory hurdles. The past few months has seen the Department of Justice launch a criminal investigation into its dealings, and Riggs was named in a number of lawsuits that center on its alleged links to terrorist funding.

“We now believe the sale of Riggs National to PNC Financial Group is at risk of being delayed or scrapped in its entirety,” said RBC Capital Markets analyst Gerard Cassidy in a report to clients. “The Department of Justice investigation in August and a lawsuit filed by a September 11 group in September have yet to be quantified, and if left unresolved by the April 30 deadline, could make the deal unpalatable to PNC.”

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