PNC Financial Services Group (NYSE: PNC) Ready to Pay Back TARP Funds in 2010
PNC Financial Services Group (NYSE: PNC) CEO James Rohr said the company has plans to pay back the $7.6 billion in TARP funds it received from the federal government sometime in 2010. Rohr added the company hopes to do it without diluting the value of its shares.
According to Rohr, who was talking at the Goldman Sachs U.S. Financial Services conference, there is no pressure from its customers or regulators to pay back the funds in a way that will not work out for their shareholders.
PNC borrowed $7.58 billion in capital from taxpayers on the last day of 2008.
Rohr said he and the bank have been in communication with regulators, and there’s agreement that 2010 will be when they pay back the loan.
It seems the announcement by Bank of America (NYSE:BAC) that they will start to pay back their TARP loan has started a move toward other banks taking the same steps. That signals the government believes they are strong enough to go forward without damaging the companies.
Bank of America, with the $45 billion they owe, aren’t in as good a position as PNC and others concerning maintaining shareholder value, and so sold $19.3 billion in stock last week in order to begin paying back their loan. Much of that came about from the bank not being able to attract quality candidates for its CEO position, as the interference of the government and compensation controls turned all good candidates away that had been approached for the job.
Wells Fargo (NYSE:WFC) continues to work in a similar manner as PNC in paying back the $25 billion in TARP funds they received, saying they also want to do it in a way that won’t dilute share value as well.
PNC wasn’t clear on how they expected to pay back the taxpayers, but it’s thought that some of it will come from profits generated in 2009, which will be a minimum of $2 billion.
The bank has built up its capital reserves organically, and so are in a pretty strong position in that regard going forward.
It wasn’t addressed on whether PNC has officially applied to the government to repay TARP funds, as it’s a requirement for all banks and companies that received them.