DOJ Tells PNC to Sell 61 NatCity Branches

Both banks for years have been mentioned for a possible combination. The banks agreed to the deal because their businesses have been hurt by high-risk mortgage loans, and National City has been weighed down by Ohio's struggling economy.

National City lost $5.15 billion during the third quarter, and was in the midst of a three-year program to cut 4,000 jobs before PNC made an offer to acquire the bank. PNC Financial said it will aggressively take write-downs and increase reserves on National City's loan portfolio when the deal closes.

PNC was profitable last quarter despite credit losses. It projects that National City's battered lending portfolio might incur $19.9 billion of lifetime losses.

The combined bank will have about $180 billion in deposits and more than 2,700 branches located mostly in the Mid-Atlantic and Midwest states as well as Florida. The combined bank also will have the largest deposit bases in Pennsylvania, Ohio and Kentucky.

It was not expected that the Department of Justice would require PNC to unload any other branches. The acquisition is expected to be completed, pending regulatory and shareholder approval, by the end of the year.

The bank said Wednesday that the integration between PNC and National City could take until late 2009 to be completed once the deal closes.

The credit crisis has forced a number of marriages of high-profile banks, including JPMorgan Chase & Co.'s purchase of Washington Mutual Inc. and Wells Fargo (WFC Quote)'s acquisition of Wachovia (WB Quote)

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AP Justice Department Reporter Lara Jakes Jordan contributed to this report from Washington.