PNC Bank 2005 Annual Report Download - page 7

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a “commonly-controlled” bank for the estimated losses
suffered by the FDIC. Such liability could have a material
adverse effect on our financial condition or that of the
assessed bank. While the FDIC's claim is junior to the claims
of depositors, holders of secured liabilities, general creditors
and subordinated creditors, it is superior to the claims of the
bank’ s shareholders and affiliates, including PNC and
intermediate bank holding companies.
SECURITIES AND RELATED REGULATION
The SEC, together with either the OCC or the Federal
Reserve, regulates our registered broker-dealer subsidiaries,
including one of BlackRock’ s subsidiaries. These subsidiaries
are also subject to rules and regulations promulgated by the
National Association of Securities Dealers, Inc. (“NASD”),
among others. Hilliard Lyons is also a member of the New
York Stock Exchange and subject to its regulations and
supervision. Two of BlackRock’ s subsidiaries are registered as
commodity pool operators with the Commodity Futures
Trading Commission and the National Futures Association,
and are subject to regulation by them.
Several of our subsidiaries, including some of BlackRock’ s
subsidiaries, are registered with the SEC as investment
advisers and, therefore, are subject to the requirements of the
Investment Advisers Act of 1940 and the SEC's regulations
thereunder. The principal purpose of the regulations applicable
to investment advisers is the protection of clients and the
securities markets, rather than the protection of creditors and
shareholders of investment advisers. The regulations
applicable to investment advisers cover all aspects of the
investment advisory business, including limitations on the
ability of investment advisers to charge performance-based or
non-refundable fees to clients; record-keeping; operational,
marketing and reporting requirements; disclosure
requirements; limitations on principal transactions between an
adviser or its affiliates and advisory clients; as well as general
anti-fraud prohibitions. Our investment advisory subsidiaries
also may be subject to state securities laws and regulations. In
addition, our investment adviser subsidiaries, such as some
BlackRock subsidiaries, that are investment advisors to
registered investment companies and other managed accounts
are subject to the requirements of the Investment Company
Act of 1940, as amended, and the SEC’ s regulations
thereunder.
Additional legislation, changes in rules promulgated by the
SEC, other federal and state regulatory authorities and self-
regulatory organizations, or changes in the interpretation or
enforcement of existing laws and rules may directly affect the
method of operation and profitability of investment advisers.
The profitability of investment advisers could also be affected
by rules and regulations that impact the business and financial
communities in general, including changes to the laws
governing taxation, antitrust regulation and electronic
commerce.
Recently, the SEC and other governmental agencies have been
investigating the mutual fund industry. The SEC has adopted
and proposed various rules, and legislation has been
introduced in Congress, intended to reform the regulation of
this industry. The effect of regulatory reform has, and is likely
to continue to, increase the extent of regulation of the mutual
fund industry and impose additional compliance obligations
and costs on our subsidiaries involved with that industry.
Under various provisions of the federal securities laws
(including in particular those applicable to broker-dealers,
investment advisers and registered investment companies and
their service providers), a determination by a court or
regulatory agency that certain violations have occurred at a
company or its affiliates can result in a limitation of permitted
activities, disqualification to continue to conduct certain
activities and an inability to rely on certain favorable
exemptions. Certain types of infractions and violations can
also affect a public company in its timing and ability to
expeditiously issue new securities into the capital markets. In
addition, expansion of activities of a broker-dealer generally
requires approval of the New York Stock Exchange and/or
NASD, and regulators may take into account a variety of
considerations in acting upon such applications, including
internal controls, capital, management experience and quality,
and supervisory concerns.
For additional information about the regulation of BlackRock,
we refer you to the discussion under the “Regulation” section
of Item 1 Business in BlackRock’ s most recent Annual Report
on Form 10-K, which may be obtained electronically at the
SEC’ s website at www.sec.gov.
COMPETITION We are subject to intense competition from
various financial institutions and from non-bank entities that
engage in similar activities without being subject to bank
regulatory supervision and restrictions.
In making loans, our subsidiary banks compete with
traditional banking institutions as well as consumer finance
companies, leasing companies and other non-bank lenders.
Loan pricing and credit standards are under competitive
pressure as lenders seek to deploy capital and a broader range
of borrowers have access to capital markets. Traditional
deposit activities are subject to pricing pressures and customer
migration as a result of intense competition for consumer
investment dollars.
Our subsidiary banks compete for deposits with the following:
• Other commercial banks,
• Savings banks,
• Savings and loan associations,
• Credit unions,
• Treasury management service companies,
• Insurance companies, and
• Issuers of commercial paper and other securities,
including mutual funds.
Our various non-bank subsidiaries engaged in investment
banking and private equity activities compete with the
following:
• Commercial banks,
• Investment banking firms ,
• Merchant banks,
• Insurance companies,
• Private equity firms, and
• Other investment vehicles.