PNC Bank Corp. said it has persuaded Philadelphia and Pennsylvania officials to provide help in financing a $70 million operations center.
Borrowing a tactic long used by manufacturers, PNC officials had threatened to establish the center and its 1,100 jobs in nearby Camden, N.J.
In all, Pittsburgh-based PNC and the developer-owner of its new processing center will receive $17.5 million in grants and loans.
In return, the $73 billion-asset bank is to consolidate its eastern region operations in a new 400,000-square-foot building near the Philadelphia airport.
The bank said it would add 400 jobs in Philadelphia in addition to establishing the center.
PNC now employs 700 people in a 185,000-square-foot building that formerly housed the Philadelphia Stock Exchange. The new center would consolidate that facility with two others, both in the Philadelphia suburbs. The new center will process checks, house telecommunications and provide a backup for Pittsburgh operations. Construction is expected to begin in May.
PNC's announcement nine months ago that it would locate its new facility in either Camden or Philadelphia set off a fierce battle between Pennsylvania and New Jersey to see which could come up with the most attractive incentive package.
"We said from the outset our preference was to stay in Philadelphia," said PNC spokesman Mark Eyerly. "But we also have a responsibility to our customers and our shareholders to make a sound business decision. The two states competed very hard, and both came back with very competitive offers."
Analysts said they knew of no other case of a bank using this strategy to win concessions from states and local governments.
"It's the first I've seen," said Gerard Cassidy, an analyst with Hancock Institutional Equity Services.
Lehman Brothers analyst Michael Mayo it makes sense from a cost standpoint. "Banks are a lot more creative at how they reduce expenses," he said. "This is just another way to keep expenses down."