PNC Bank 2008 Annual Report Download - page 150

and aided and abetted the BAE defendants’ breaches of
fiduciary duties. In September 2008, the United States District
Court for the District of Columbia granted the motions of all
defendants to dismiss the plaintiff’s complaint. Plaintiff has
appealed to the United States Court of Appeals for the District
of Columbia Circuit. As it relates to PNC, plaintiff is seeking
unquantified monetary damages (including punitive damages),
an accounting, interest, attorneys’ fees and other expenses. As
a result of our acquisition of Riggs, PNC may be responsible
for indemnifying the Allbrittons in connection with this
lawsuit.
Regulatory and Governmental Inquiries
As a result of the regulated nature of our business and that of a
number of our subsidiaries, particularly in the banking and
securities areas, we and our subsidiaries are the subject of
investigations and other forms of regulatory inquiry, in some
cases as part of regulatory reviews of specified activities at
multiple industry participants. Among the areas in which there
is currently significant regulatory interest are practices in the
mutual fund and mortgage lending businesses. Several of our
subsidiaries have received requests for information and other
inquiries from governmental and regulatory authorities in
these areas.
In June 2008, National City was notified that the Chicago
Regional Office of the SEC is conducting an informal
investigation of National City. The SEC has requested that
National City provide the SEC with documents concerning,
among other things, its loan underwriting experience,
allowance for loan losses, marketing practices, dividends,
bank regulatory matters and the sale of First Franklin
Financial Corporation.
The SEC is conducting a non-public investigation into the EFI
situation at Sterling. The United States Attorney’s Office for
the Eastern District of Pennsylvania is also investigating the
EFI situation.
Our practice is to cooperate fully with regulatory and
governmental investigations, audits and other inquiries,
including those described above. Such investigations, audits
and other inquiries may lead to remedies such as fines,
restitution or alterations in our business practices.
Other
In addition to the proceedings or other matters described
above, PNC and persons to whom we may have
indemnification obligations, in the normal course of business,
are subject to various other pending and threatened legal
proceedings in which claims for monetary damages and other
relief are asserted. We do not anticipate, at the present time,
that the ultimate aggregate liability, if any, arising out of such
other legal proceedings will have a material adverse effect on
our financial position. However, we cannot now determine
whether or not any claims asserted against us or others to
whom we may have indemnification obligations, whether in
the proceedings or other matters specifically described above
or otherwise, will have a material adverse effect on our results
of operations in any future reporting period.
See Note 25 Commitments and Guarantees for additional
information regarding the Visa indemnification and our
obligation to provide indemnification to current and former
officers, directors, employees and agents of PNC and
companies we have acquired, including National City.
N
OTE 25 C OMMITMENTS AND G UARANTEES
E QUITY F UNDING AND O THER C OMMITMENTS
Our unfunded commitments at December 31, 2008 included
private equity investments of $540 million and other
investments of $178 million.
S TANDBY L ETTERS OF C REDIT
We issue standby letters of credit and have risk participations
in standby letters of credit and bankers’ acceptances issued by
other financial institutions, in each case to support obligations
of our customers to third parties, such as remarketing
programs for customers’ variable rate demand notes. Net
outstanding standby letters of credit totaled $10.3 billion at
December 31, 2008.
If the customer fails to meet its financial or performance
obligation to the third party under the terms of the contract or
there is a need to support a remarketing program, then upon
the request of the guaranteed party, we would be obligated to
make payment to them. The standby letters of credit and risk
participations in standby letters of credit and bankers’
acceptances outstanding on December 31, 2008 had terms
ranging from less than one year to 14 years. The aggregate
maximum amount of future payments PNC could be required
to make under outstanding standby letters of credit and risk
participations in standby letters of credit and bankers’
acceptances was $13.7 billion at December 31, 2008, of which
$5.1 billion support remarketing programs.
Assets valued as of December 31, 2008 of approximately $.9
billion secured certain specifically identified standby letters of
credit. Approximately $3.4 billion in recourse provisions from
third parties was also available for this purpose as of
December 31, 2008. In addition, a portion of the remaining
standby letters of credit and letter of credit risk participations
issued on behalf of specific customers is also secured by
collateral or guarantees that secure the customers’ other
obligations to us. The carrying amount of the liability for our
obligations related to standby letters of credit and risk
participations in standby letters of credit and bankers’
acceptances was $119 million at December 31, 2008.
S TANDBY B OND P URCHASE A GREEMENTS AND O THER
L IQUIDITY F ACILITIES
We enter into standby bond purchase agreements to support
municipal bond obligations. At December 31, 2008, the
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