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The PNC Financial Services Group, Inc. Message Board

  • wareham2620 wareham2620 Feb 2, 2010 9:53 PM Flag

    PNC selling $3 billion in stock to repay TARP

    SAN FRANCISCO (MarketWatch) -- PNC Financial Services Group unveiled a big stock offering late Tuesday to help the bank repay billions of dollars in government support.

    PNC /quotes/comstock/13*!pnc/quotes/nls/pnc (PNC 53.75, -0.90, -1.65%) said it plans to raise $3 billion selling new common stock. An agreement to sell PNC Global Investment Servicing to Bank of New York Mellon /quotes/comstock/13*!bk/quotes/nls/bk (BK 29.26, -0.32, -1.08%) for $2.3 billion in cash, announced earlier on Tuesday, will give PNC more money to repay the government.

    PNC aims to redeem $7.6 billion of preferred shares it sold to the U.S. Treasury Department during the 2008 financial crisis. The bank also said it will sell $1.5 billion to $2 billion of new senior notes, a type of debt, to get more short-term cash for the repayment. The redemption is scheduled some time in February, the bank noted.

    "With signs of an improving economic environment and stabilizing financial system, we believe now is the appropriate time for us to redeem the preferred shares held by the U.S. Treasury," PNC Chief Executive James Rohr said in a statement. "We are pleased to have reached an agreement with our regulators to return the taxpayers' investment in PNC."

    PNC shares slipped 0.3% to $54.49 during after-hours trading on Tuesday.

    PNC is one of the last big U.S. banks to repay money it got through the Treasury's Troubled Asset Relief Program, or TARP. Larger rivals including Wells Fargo /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 28.73, -0.06, -0.21%) , Bank of America /quotes/comstock/13*!bac/quotes/nls/bac (BAC 15.62, +0.02, +0.13%) and J.P. Morgan Chase /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 40.80, +0.25, +0.62%) repaid TARP last year.

    PNC noted that the Treasury will hold on to warrants giving the U.S. government the right to buy roughly 16.9 million shares of the bank's common stock at $67.33 each.

    If the sale of PNC Global Investment Servicing isn't completed by Nov. 1, the bank agreed with regulators that it will raise another $700 million to $1.6 billion, either by selling other assets or issuing more common stock.

    The sale of PNC Global Investment Servicing, the $3 billion stock offering and the TARP redemption will boost PNC's Tier 1 common capital by roughly $4.3 billion, the bank said.

    Including those transactions, PNC's Tier 1 common capital ratio would have increased by about 200 basis points to an estimated 8% at the end of 2009. Tier 1 risk-based capital ratio would have been an estimated 10.3%, it added.

92.16-0.11(-0.12%)Feb 26 4:01 PMEST

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