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PNC's offer to buy Riggs Bank collapses

WASHINGTON - PNC Financial Services Group Inc.'s offer to buy embattled Riggs Bank collapsed in bitterness Monday as Riggs parent sued the regional bank for damages after PNC slashed its takeover bid by about 20 percent. The developments came after Riggs recently pleaded guilty to violations of a law to prevent money laundering.

Uncertainty regarding those and other legal issues and declining deposits at Riggs branches rendered the bank less valuable for PNC, analysts said.

PNC had agreed in July to pay $24.25 a share, or about $779-million in cash and stock, for Riggs, an old-line Washington institution that had a near-monopoly on business with the capital's diplomatic community.

But Riggs pleaded guilty on Jan. 27 to failing to report suspicious transactions in the accounts of foreigners, including former Chilean dictator Augusto Pinochet. The bank agreed to pay a $16-million fine - the largest criminal penalty imposed on a bank of Riggs's size, according to federal prosecutors - on top of a record $25-million civil fine levied on the bank by a Treasury Department agency in May.

The plea agreement needs the approval of U.S. District Judge Ricardo Urbina, who expressed some skepticism about the penalty's adequacy at a hearing.

Riggs National Corp., parent of Riggs Bank, said Monday its board had unanimously rejected a reduced merger offer of $19.32 a share from PNC.

PNC insisted it had acted in good faith and put forward a fair offer that took into account the "deteriorations that have occurred at Riggs since July."

[Last modified February 8, 2005, 00:21:16]