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S&P Corrects Omissions In PNC Financial Ratings

The Associated Press

NEW YORK (AP) — Standard & Poor's Ratings Services said Wednesday it corrected its ratings on subsidiaries of PNC Financial Services Group Inc.

The changes follow the Pittsburgh-based bank's acquisition last fall of Cleveland-based National City Corp. for $5.6 billion. S&P said several legal-entity mergers associated with the acquisition were not reflected at the time the transaction closed.

S&P described the following changes:

—National City Bank Kentucky is merged into National City Bank, and the senior unsecured and subordinated debt issuances of National City Bank Kentucky are now obligations of National City Bank. S&P said that debt has been placed on "CreditWatch Negative," which means there is a 50 percent chance the ratings will be cut in the next three months.

—National City Bank is now being properly reflected as a subsidiary of PNC Financial Services. As such, all rating types and all outstanding debt issuances of National City Bank are on negative watch.

—National City Capital Trust IV is now being properly reflected as a subsidiary of PNC Financial Services. The 'BBB' outstanding junior subordinated rating is on negative watch. 'BBB' is an investment-grade rating two notches above junk.

—PFGI Capital Corp. is now being properly reflected as a subsidiary of PNC Bank NA, and the preferred stock of PFGI Capital Corp. now properly carries a 'BBB+' rating — the third lowest investment-grade rating. The ratings on PFGI Capital Corp.'s outstanding preferred stock are on negative watch.

"The actions are required to correct several erroneous CreditWatch omissions," S&P credit analyst John Bartko said.

Wednesday's moves came after S&P on May 4 placed PNC Financial Services and 22 other regional and national banks on CreditWatch Negative. The negative watch is tied to an ongoing industrywide review S&P is conducting on the financial services sector, which has been battered for nearly two years by the credit crisis and ongoing recession.

Shares of PNC Financial Services fell $1.54, or nearly 3.7 percent, to close at $40.33 on Wednesday.