PNC Financial Services
faces a conundrum. If PNC sells its stake in BlackRock[profile]
, it would end up losing a significant chunk of its profits. It is also in their interest to use the proceeds from selling that stake to strength capital and liquidity, which lag behind its peers, The Motley Fool
PN owns a 21 percent stake in BlackRock.
"The sale of PNC Financialís stake in BlackRock, Inc. make $6.8 billion available to PNC Financial, some of which could be used to increase its capital base. A robust capital base is important for banks since itís the key criteria for the Fedís stress tests."
In the case it sold the stake, after-tax proceeds would amount to 6.8 billion, and PNC Financial could repurchase 96 million shares of its common stock. PNC Financial would earn $6.60 a share this year. The Motley Fool argues that PNC Financial needs to focus on cutting down expenses. The company closed 65 branches in the past year and plans to close 200 branches this year, which shows they are serious about trimming the fat.
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