Regulatory Matters

12 Months Ended

Dec. 31, 2014

Regulatory Capital Requirements [Abstract]

Regulatory Matters

Note 20 Regulatory Matters

We are subject to the regulations of certain federal, state, and foreign agencies and undergo periodic examinations by such regulatory authorities.

The ability to undertake new business initiatives (including acquisitions), the access to and cost of funding for new business initiatives, the ability to pay dividends, the ability to repurchase shares or other capital instruments, the level of deposit insurance costs, and the level and nature of regulatory oversight depend, in large part, on a financial institution’s capital strength.

At December 31, 2014, PNC and PNC Bank, our domestic banking subsidiary, were both considered “well capitalized,” based on applicable U.S. regulatory capital ratio requirements. To qualify as “well capitalized,” PNC and PNC Bank were required during 2014 to maintain Transitional Basel III capital ratios of at least 6% for Tier 1 risk-based and 10% for Total risk-based, and PNC Bank was required to have a Transitional Basel III leverage ratio of at least 5%.

The minimum U.S. regulatory capital ratios in effect during 2013 under Basel I, the applicable U.S. regulatory capital ratio requirements during 2013, were 4% for Tier 1 risk-based, 8% for Total risk-based and 4% for Leverage. To qualify as “well capitalized” under Basel I, bank holding companies and banks had to maintain capital ratios of at least 6% for Tier 1 risk-based, 10% for Total risk-based and 5% for Leverage. At December 31, 2013, PNC and PNC Bankmet the “well capitalized” capital ratio requirements based on U.S. regulatory capital ratio requirements under Basel I.

The following table sets forth the Transitional Basel III regulatory capital ratios at December 31, 2014, and the Basel I regulatory capital ratios at December 31, 2013, for PNC and PNC Bank.

Table 147: Basel Regulatory Capital
			Amount				Ratios
December 31
Dollars in millions				2014 (a)		2013 (b)(c)	2014 (a)		2013 (b)(c)
Risk-based capital
	Tier 1
		PNC	$	35,687	$	33,612	12.6	%	12.4	%
		PNC Bank		29,328		28,731	10.7		11.0
	Total
		PNC		44,782		42,950	15.8		15.8
		PNC Bank		37,559		37,575	13.7		14.3
Leverage
		PNC		35,687		33,612	10.8		11.1
		PNC Bank		29,328		28,731	9.2		9.8
(a)	Calculated using the Transitional Basel III regulatory capital methodology applicable to PNC during 2014.
(b)	Calculated using the Basel I regulatory capital methodology applicable to PNC during 2013.
(c)	Amounts for 2013 period have not been updated to reflect the first quarter 2014 adoption of ASU 2014-01 related to investments in low income housing tax credits.

The principal source of parent company cash flow is the dividends it receives from its subsidiary bank, which may be impacted by the following:

• Capital needs,

• Laws and regulations,

• Corporate policies,

• Contractual restrictions, and

•Other factors.

Also, there are statutory and regulatory limitations on the ability of national banks to pay dividends or make other capital distributions. The amount available for dividend payments to the parent company by PNC Bank without prior regulatory approval was approximately $1.5 billion at December 31, 2014.

Under federal law, a bank subsidiary generally may not extend credit to, or engage in other types of covered transactions (including the purchase of assets) with, the parent company or its non-bank subsidiaries on terms and under circumstances that are not substantially the same as comparable transactions with nonaffiliates. A bank subsidiary may not extend credit to, or engage in a covered transaction with, the parent company or a non-bank subsidiary if the aggregate amount of the bank’s extensions of credit and other covered transactions with the parent company or non-bank subsidiary exceeds 10% of the capital stock and surplus of such bank subsidiary or the aggregate amount of the bank’s extensions of credit and other covered transactions with the parent company and all non-bank subsidiaries exceeds 20% of the capital and surplus of such bank subsidiary. Such extensions of credit, with limited exceptions, must be at least fully collateralized in accordance with specified collateralization thresholds, with the thresholds varying based on the type of assets serving as collateral. In certain circumstances, federal regulatory authorities may impose more restrictive limitations.

Federal Reserve Board regulations require depository institutions to maintain cash reserves with a Federal Reserve Bank (FRB). At December 31, 2014, the balance outstanding at the FRB was $31.4 billion.