When PNC Bank Corp. announced an agreement 10 months ago to buy a leading money manager, danger signs were all over the place.

The money manager, BlackRock Financial Management, was a specialist in bonds in a year of stunning losses in the bond markets.

Furthermore, banks don't have a great reputation for keeping talented money managers. If the veterans left BlackRock, PNC could end up buying an empty shell.

But with the completion of the deal last week for $240 million of cash and notes, PNC appears to have avoided the pitfalls and acquired a healthy, growing enterprise.

"Since we announced (the merger), things have really gone better than we ever hoped," enthused Richard C. Caldwell, chairman of PNC Asset Management Group Inc., the banking company's money management unit.

Which isn't to say that BlackRock had it easy last year. When PNC announced plans to buy BlackRock, the New York-based money manager had $23 billion of fixed-income assets in 70 separately managed institutional portfolios and 24 mutual funds

In 1994, the value of BlackRock's portfolios tanked by about a tenth, Mr. Caldwell said. He attributed the damage to the troubled bond markets. BlackRock, he added, performed admirably, besting its "bogies," or targeted performance benchmarks, by 80 to 120 basis points.

Its strong track record helped BlackRock pick up nearly $6 billion in additional assignments, increasing its total assets under management to $24.3 billion by the time of the acquisition.

Furthermore, PNC was able to profit from others' woes, when it won a plum job in November to advise Kidder, Peabody & Co. on the disposal of its troubled mortgage-backed securities portfolio. BlackRock was reported to have taken advantage of its close ties to Kidder's former parent, General Electric Co., which uses BlackRock as a money manager for its pension fund.

PNC has also been able to hang on to BlackRock's talent. All 16 BlackRock partners have agreed to stay on with the company after the merger. One reason is that they are getting bonuses of $2 million to $50 million if they remain for five years, according to a senior official.

PNC plans to mesh this talent into the heart of its investment operations. BlackRock staff will set PNC's fixed-income investment policies. They also will work with PNC staff to run all of PNC's bond mutual funds and trust funds. This will swell the book of assets controlled by BlackRock to about $40 billion of the more than $80 billion that PNC manages, Mr. Caldwell said.

BlackRock chairman Laurence D. Fink and president Ralph L. Schlosstein will be directors of Mr. Caldwell's Asset Management Group. Mr. Fink will also be one of a dozen members of PNC's asset-liability committee, a politically sensitive post on a group that manages the bank's own balance sheet.

PNC lost $79 million when it sold $1.8 billion of fixed-rate securities from its portfolio in December.

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