With changes to capital standards looming, PNC Financial Services Group (PNC) is preparing to redeem $967.5 million in trust-preferred securities.
The $288 billion-asset company said Thursday that it will repurchase $450 million in trust-preferred securities issued by PNC Capital Trust E and $517.5 million of enhanced trust-preferred securities issued by National City Capital Trust IV in late July. PNC inherited National City's trust-preferred obligations when it acquired the Cleveland bank in 2009.
Because of these redemptions and possibly others in the fourth quarter, the company said that its second half noncash charges should be $162 million, rather than $150 million as disclosed in its first quarter 10-Q.
Under a new provision of the Dodd-Frank Act, banks with at least $15 billion of assets at Dec. 31, 2009 will no longer be able to count trust-preferred securities toward their Tier 1 capital. The requirement will start being phased in at the beginning of 2013.
So far several banks, including Bank of America (BAC), BB&T (BBT) and TCF Financial (TCB), have announced that they will repurchase their trust-preferred securities and more banks are expected to make similar plans over the next few months.