Riggs Bank's pending absorption into PNC Bank of Pittsburgh will mark the end of an institution that has helped define the face of Washington, D.C., and shaped the course of the United States since 1836.
Riggs Bank financed the Baltimore-Washington telegraph line that Samuel Morse used in 1843 to transmit the famous message, "What hath God wrought?" It also provided financial backing to the United States government for the war against Mexico in the 1840s. On an even grander scale, Riggs provided the $7.2 million in gold that the United States used to buy Alaska from Russia.
In 1981, Texas financier Joe Allbritton bought the "the most important bank in the most important city in the world," as it described itself, in a hostile takeover.
Allbritton set out to transform Riggs into a major bank for foreign governments, as well as the numerous embassies and foreign diplomatic personnel based in Washington. After Allbritton handed the bank over to his son, Robert, in 2001, courting this business segment remained a priority, though Robert focused his efforts on improving the efficiency of the bank and its service to the local
In May 2003 the Office of the Comptroller of the Currency said it would take action against Riggs for failing to properly police suspicious transactions. Federal investigators also tried to determine whether a Saudi princess used money from a Riggs account to help finance the Sept. 11, 2001, terrorist attacks.
The initial probes into Riggs's activities turned up more problems.
In April 2004, the Office of the Comptroller of the Currency fined Riggs a record $25 million for not having sufficient anti-money laundering controls in place in its dealings with Teodoro Obiang Nguema, ruler of Equatorial Guinea, an oil-rich but impoverished sub-Saharan African nation.
Following that announcement, Robert Allbritton said the company would shutter its international business and focus on Washington-area customers. In July 2004, the company negotiated a $766 million buyout with Pittsburgh-based PNC Bank. Joe Allbritton and his wife Barbara eventually resigned from the board of directors, though the Allbritton family still controls the majority of Riggs's shares.
The situation worsened in July when a Senate investigation revealed that Riggs helped former Chilean dictator Augusto Pinochet hide millions of dollars from international prosecutors.
On Jan. 27, 2005, Riggs admitted its liability for failing to take adequate measures to prevent Pinochet's money laundering and agreed to pay $16 million to the Justice Department to settle a criminal investigation. A federal judge is set to rule on the criminal settlement by the end of March.
The company's sale to PNC almost fell apart after the Pittsburgh bank drastically lowered its purchase offer following the announcement of the Justice Dept. settlement.
On Feb. 10, the merger was back on, but for only $652 million. If the deal is completed, the Riggs name is expected to come down off its 51 area branches in June to be replaced by the new owner's name, PNC.