PNC Bank 2010 Annual Report Download - page 17
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Please find page 17 of the 2010 PNC Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.found by the primary banking regulator through its
examination and supervision of the bank. A negative
evaluation by the FDIC or a bank’s primary federal banking
regulator could increase the costs to a bank and result in an
aggregate cost of deposit funds higher than that of competing
banks in a lower risk category. Also, the deposit insurance
provisions of Dodd-Frank, as implemented by the FDIC, could
increase the deposit insurance premiums for a bank such as
PNC Bank, N.A.
S
ECURITIES AND
R
ELATED
R
EGULATION
The SEC is the functional regulator of our registered broker-
dealer and investment advisor subsidiaries. The registered
broker-dealer subsidiaries are also subject to rules and
regulations promulgated by the Financial Industry Regulatory
Authority (FINRA), among others.
Several of our subsidiaries are registered with the SEC as
investment advisers and provide services to clients, other PNC
affiliates and related entities, including registered investment
companies. Under rules to be adopted under Dodd-Frank, we
expect to be required to register additional subsidiaries as
investment advisors to private equity funds. Broker-dealer
subsidiaries are subject to the requirements of the Securities
Exchange Act of 1934, as amended, and the regulations
thereunder. Investment advisor subsidiaries are subject to the
requirements of the Investment Advisers Act of 1940, as
amended, and the regulations thereunder. An investment
advisor to registered investment companies is also subject to
the requirements of the Investment Company Act of 1940, as
amended, and the regulations thereunder.
Our broker-dealer and investment advisory subsidiaries also
may be subject to state securities laws and regulations. Over
the past several years, the SEC and other governmental
agencies have been focused on the mutual fund, hedge fund
and broker-dealer industries. Congress and the SEC have
adopted regulatory reforms and are continuing additional
reforms that have increased, and are likely to continue to
increase, the extent of regulation of the mutual fund, hedge
fund and broker-dealer industries and impose additional
compliance obligations and costs on our subsidiaries involved
with those industries.
Under provisions of the federal securities laws 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 fines, restitution, a
limitation on 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, certain changes in the activities of a
broker-dealer require approval from FINRA, and FINRA takes
into account a variety of considerations in acting upon
applications for such approval, including internal controls,
capital levels, management experience and quality, prior
enforcement and disciplinary history and supervisory concerns.
Our securities businesses with operations outside the United
States, including BlackRock, are also subject to regulation by
appropriate authorities in the foreign jurisdictions in which
they do business.
BlackRock has subsidiaries in securities and related
businesses subject to SEC and FINRA regulation, as described
above, and a federally chartered nondepository trust company
subsidiary subject to the supervision and regulation of the
OCC. 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.
In addition, Dodd-Frank subjects virtually all derivative
transactions (swaps) to regulation by either the Commodity
Futures Trading Commission (CFTC) (in the case of non
security-based swaps) or the SEC (in the case of security-
based swaps). This section of Dodd-Frank was enacted to
reduce systemic risk, increase transparency, and promote
market integrity within the financial system by, among other
things: (i) providing for the registration and comprehensive
regulation of swap dealers (SDs) and major swap participants
(MSPs); (ii) imposing mandatory clearing and trade execution
requirements on all standardized swaps, with certain limited
exemptions; (iii) creating robust recordkeeping and real-time
public data reporting regimes with respect to swaps;
(iv) imposing capital and margin requirements on SDs and
MSPs; (v) imposing business conduct requirements on SDs
and MSPs in their dealings with counterparties; and
(vi) enhancing the CFTC’s and SEC’s rulemaking and
enforcement authorities with respect to SDs and MSPs. Under
the rules anticipated under Dodd-Frank, we expect to register
with the CFTC as an SD and accordingly be subject to all of
the new regulations and requirements imposed on an SD.
COMPETITION
We are subject to intense competition from various financial
institutions and from non-bank entities that can offer a number
of similar products and services without being subject to bank
regulatory supervision and restrictions.
In making loans, PNC Bank, N.A. competes with traditional
banking institutions as well as consumer finance companies,
leasing companies and other non-bank lenders, and
institutional investors including CLO managers, hedge funds,
mutual fund complexes and private equity firms. Loan pricing,
structure and credit standards are extremely important in the
current environment as we seek to achieve appropriate risk-
adjusted returns. Traditional deposit-taking activities are also
subject to pricing pressures and to customer migration as a
result of intense competition for consumer investment dollars.
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