Banks

PNC Financial Services buying National City

US Northeast regional bank PNC will buy rival National City in a 5.6 billion dollar stock-and-cash deal that will create the nation's fifth largest bank by deposits, the companies said Friday.

The PNC Financial Services Group, Inc., based in Pittsburgh, Pennsylvania, will acquire National City Corporation for 2.23 dollars per share, representing about 5.2 billion dollars, they said in a joint statement.

An additional 384 million dollars in cash will be paid to certain warrant holders.

The 5.584-billion-dollar acquisition of the Cleveland, Ohio-based National City comes as PNC taps a new US Treasury emergency program for 7.7 billion dollars.

PNC said it will issue to the US Treasury 7.7 billion dollars of preferred stock and related warrants under the Troubled Asset Relief Program, aimed at injecting capital into troubled banks to promote lending in the worst credit squeeze in seven decades.

The transaction is expected to close by year-end, subject to shareholder and regulatory approval.

(Published by AP- October 24, 2008)