PNC Financial Services (PNC), the sixth largest bank in the US by deposits said yesterday that it plans to raise $3 billion through the sale of new common stock, after it reached an agreement with banking regulators and the US Treasury to allow it to redeem the $7.6 billion of preferred shares held by the US Treasury under the Troubled Asset Relief Program (TARP).
Yesterday, it agreed to sell its global investment servicing business, PNC Global Investment Servicing Inc. a leading provider of back-office processing for financial advisers, fund managers and brokers to Bank of New York Mellon for $2.31 billion in cash. (See: Bank of New York Mellon to acquire PNC unit for $2.1 billion)
PNC plans to offer senior notes in an aggregate amount of $1.5 billion to $2.0 billion. The debt offering is expected to provide additional liquidity to redeem the TARP preferred shares, which the bank anticipates to take place this month.
"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 US Treasury. As a result, we are pleased to have reached an agreement with our regulators to return the taxpayers' investment in PNC," said James Rohr, chairman and chief executive officer of PNC.
Pittsburgh-based PNC said that it has agreed with its regulators that if the PNC's Global Investment Servicing sale is not completed by 1 November 2010, it would raise additional common equity in an amount between approximately $700 million and $1.6 billion either through the sale of other assets or the issuance of additional common stock.
PNC received $7.6 billion through TARP in late 2008 and has repaid $425 million in quarterly dividends to the Treasury on TARP preferred shares.