| |||||||||||||||||||||||||
| |||||||||||||||||||||||||
 When PNC Financial Services Group Inc. completes its acquisition of National City Corp. it'll get not only the bank's branches and deposits, but a huge tax break as well. In fact the tax benefit could be so high as to nearly cover the $5.6 billion purchase price.
A story in The Wall Street Journal outlined how a recent ruling by the
Internal Revenue Service could allow the bank to write off as much as
$5.1 billion of its income, according to interviews with tax experts. In September
the IRS raised the limit on how much taxable income a purchasing bank
could offset write off with a target bank's losses. The rule change
immediately gives PNC the tax benefits it would have previously waited years for.
PNC's $5.6 billion all-stock acquisition of National City is swiftly turning into an example of the exact opposite of what the Treasury Department said it didn't want to happen with the bailout. PNC is set to receive $7.7 billion preferred share equity injection from the government, but instead of increasing lending it'll be acquiring a rival bank. The Treasury will then receive the added blow of seeing PNC get a huge tax break on a deal that it pretty much bankrolled. News of such as savings in the billions (National City's CEO told the Journal that the $5.1 billion figure is too high) will not be music to the ears of lawmakers who passed the bailout on the premise that it would save the economic system, not be a handout to bankers. Last week Senate Banking Committee Chairman Christopher Dodd and other lawmakers started questioning how the Treasury Department is using the $700 billion Congress gave it to stabilize the market. With members of the House also up in arms over the size of Wall Street bonuses, multibillion-dollar tax breaks are probably the last thing Secretary Hank Paulson wants to hear about. - George White See WSJ story See Dealscape post on Dodd/bailout See Dealscape post on Wall Street bonuses See Dealscape post on PNC-Nat City deal Categories Deal Video
    Community
 Elsewhere on The Deal.comDealwatch
The Deal MagazineCorporate Dealmaker
The Deal VideoCategories
Blog roll
Archives
| |||||||||||||||||||||||||
|
|
|
|
|
©Copyright 2009, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.
