PITTSBURGH PNC Financial Services agrees to buy Riggs, the target of probe

The deal allows PNC to expand to Washington.
ASSOCIATED PRESS
PNC Financial Services Group Inc. agreed Friday to buy Riggs National Corp., which is under investigation on allegations of failing to prevent, and in some cases fostering money laundering, for about $779 million in stock and cash.
Its Riggs Bank subsidiary, an old-line Washington institution with deep ties to the diplomatic community, has been sanctioned by federal regulators and is under congressional investigation on allegations of helping hide money for former Chilean dictator Augusto Pinochet and other lapses.
As part of the deal with Pittsburgh-based PNC, Riggs will shed all of its diplomatic and international businesses.
Riggs was fined a record $25 million in May by federal banking regulators for alleged violations of laws against money laundering in its handling of cash transactions in Saudi-controlled accounts under investigation for possible links to terrorism financing.
"Obviously, ensuring regulatory compliance is a top priority for us," PNC spokesman Brian Goerke said Friday. "The remaining regulatory issues will be mostly resolved before the close of this transaction."
Outrage at executives
The proposed merger announcement comes a day after senators investigating Riggs operations expressed outrage at senior bank officials' failure to act while managers helped former Chilean dictator Augusto Pinochet conceal millions in assets and turned a blind eye to improper payments to officials of Equatorial Guinea.
Lurid details -- such as a suitcase stuffed with cash -- emerged at a Senate hearing into Riggs' handling of the accounts. Lawmakers insisted it was impossible for high-level bank executives to be unaware of the actions.
In fact, the bank's former chairman and chief executive, Joseph Allbritton, went to Chile to solicit Pinochet's business a decade ago, and he and other senior bank officials were familiar with the transactions in Pinochet's accounts, senators said.
Allbritton is a major business and social figure in the capital. He owns local television station WJLA and had owned the now-defunct Washington Star newspaper.
Although he recently resigned from the bank's board, he remains the biggest shareholder. He agreed to vote 24.6 percent of Riggs stock in favor of the merger, PNC said.
Background
Riggs, a midsize institution, is the largest bank based in the Washington area with $6 billion in assets, 50 branches and a virtual monopoly on embassy business in the capital.
"Riggs's strong banking franchise gives us an excellent platform on which to build in the extremely appealing metropolitan Washington marketplace," PNC Chief Executive James Rohr said in a statement.
PNC is offering $321 million in cash and 7.5 million of its common shares.
The boards of directors of both banks unanimously approved the deal, PNC said.