PNC Bank 2014 Annual Report Download - page 231

satisfy contingent fundings to various direct investments and
capital calls for commitments to various indirect private
equity investments. Support to direct investments is generally
to provide for growth financing or to support acquisitions or
recapitalizations.
Other commitments related to equity investments at December
31, 2014 were $962 million, of which $169 million were
unfunded commitments that were not recorded on our
Consolidated Balance Sheet. The remaining $793 million of
commitments were included in Other liabilities on our
Consolidated Balance Sheet, of which $717 million related to
tax credit investments.
Standby Bond Purchase Agreements and Other Liquidity
Facilities
We enter into standby bond purchase agreements to support
municipal bond obligations. At December 31, 2014, the
aggregate of our commitments under these facilities was $1.1
billion. We also enter into certain other liquidity facilities to
support individual pools of receivables acquired by
commercial paper conduits. There were no commitments
under these facilities at December 31, 2014.
Indemnifications
We are a party to numerous acquisition or divestiture
agreements under which we have purchased or sold, or agreed
to purchase or sell, various types of assets. These agreements
can cover the purchase or sale of entire businesses, loan
portfolios, branch banks, partial interests in companies, or
other types of assets.
These agreements generally include indemnification
provisions under which we indemnify the third parties to these
agreements against a variety of risks to the indemnified parties
as a result of the transaction in question. When PNC is the
seller, the indemnification provisions will generally also
provide the buyer with protection relating to the quality of the
assets we are selling and the extent of any liabilities being
assumed by the buyer. Due to the nature of these
indemnification provisions, we cannot quantify the total
potential exposure to us resulting from them.
We provide indemnification in connection with securities
offering transactions in which we are involved. When we are
the issuer of the securities, we provide indemnification to the
underwriters or placement agents analogous to the
indemnification provided to the purchasers of businesses from
us, as described above. When we are an underwriter or
placement agent, we provide a limited indemnification to the
issuer related to our actions in connection with the offering
and, if there are other underwriters, indemnification to the
other underwriters intended to result in an appropriate sharing
of the risk of participating in the offering. Due to the nature of
these indemnification provisions, we cannot quantify the total
potential exposure to us resulting from them.
In the ordinary course of business, we enter into certain types
of agreements that include provisions for indemnifying third
parties. We also enter into certain types of agreements,
including leases, assignments of leases, and subleases, in
which we agree to indemnify third parties for acts by our
agents, assignees and/or sublessees, and employees. We also
enter into contracts for the delivery of technology service in
which we indemnify the other party against claims of patent
and copyright infringement by third parties. Due to the nature
of these indemnification provisions, we cannot calculate our
aggregate potential exposure under them.
In the ordinary course of business, we enter into contracts with
third parties under which the third parties provide services on
behalf of PNC. In many of these contracts, we agree to
indemnify the third party service provider under certain
circumstances. The terms of the indemnity vary from contract
to contract and the amount of the indemnification liability, if
any, cannot be determined.
We are a general or limited partner in certain asset
management and investment limited partnerships, many of
which contain indemnification provisions that would require
us to make payments in excess of our remaining unfunded
commitments. While in certain of these partnerships the
maximum liability to us is limited to the sum of our unfunded
commitments and partnership distributions received by us, in
the others the indemnification liability is unlimited. As a
result, we cannot determine our aggregate potential exposure
for these indemnifications.
In some cases, indemnification obligations of the types
described above arise under arrangements entered into by
predecessor companies for which we become responsible as a
result of the acquisition.
Pursuant to their bylaws, PNC and its subsidiaries provide
indemnification to directors, officers and, in some cases,
employees and agents against certain liabilities incurred as a
result of their service on behalf of or at the request of PNC
and its subsidiaries. PNC and its subsidiaries also advance on
behalf of covered individuals costs incurred in connection
with certain claims or proceedings, subject to written
undertakings by each such individual to repay all amounts
advanced if it is ultimately determined that the individual is
not entitled to indemnification. We generally are responsible
for similar indemnifications and advancement obligations that
companies we acquire had to their officers, directors and
sometimes employees and agents at the time of acquisition.
We advanced such costs on behalf of several such individuals
with respect to pending litigation or investigations during
2014. It is not possible for us to determine the aggregate
potential exposure resulting from the obligation to provide this
indemnity or to advance such costs.
The PNC Financial Services Group, Inc. – Form 10-K 213