PNC Financial Services Group Inc., which agreed to buy National City Corp. last month, said Thursday that the tax benefit it may recognize from the deal will not exceed $725 million and could be "substantially smaller."

Observers had previously speculated that the benefit could exceed the $5.2 billion deal price.

In a regulatory filing PNC said that, though the potential tax benefit had a "modest positive impact on the economics of the combination, it was not a significant factor in PNC's decision to enter into the merger agreement."

PNC also said Thursday that it would issue 93 million shares of common stock in connection with the deal.

The Pittsburgh banking company is to issue 1,500 shares of preferred stock to help pay for the acquisition of Cleveland-based National City.

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