US nets $320.3M on sale of PNC Financial warrants

By MARTIN CRUTSINGER AP Economics Writer

WASHINGTON (AP) - The government has received $320.3 million from the sale of warrants it held from PNC Financial Services Group Inc. as part of the support it provided the bank during the financial crisis.

The Treasury Department said Friday that it sold 16.9 million warrants in an auction with a sales price of $19.20 per warrant. Warrants are financial instruments that allow the holder to buy stock in the future at a fixed price.

Financial institutions have been eager to cut all ties to the $700 billion bailout program, known as the Troubled Assets Relief Program, to escape various restrictions imposed on institutions receiving government support including limitations on executive compensation.

PNC, which is based in Pittsburgh, received $7.6 billion in government support from the bailout fund in December 2008.

The $19.20 auction price was above the $15 per warrant minimum bid price that had been set by Treasury.

In pre-opening trading Friday, PNC shares slipped 11 cents to $65.95.

PNC is the first warrant auction among a group of six banks that includes Wells Fargo & Co., Comerica Inc., Valley National Bancorp, Sterling Bancshares Inc. and First Financial Bancorp.

Treasury has not announced the specific dates for the remaining five auctions but has said it expects to complete all of them within the next six weeks.

The warrant auctions are held when Treasury and the banks cannot agree on a price for the warrants. The warrants are designed to give taxpayers an additional return on the government's investment.

On Monday, Treasury announced that it had authorized the start of sales of the first 20 percent of the 7.7 billion shares of Citigroup stock that it owns. The government received those shares last summer for a purchase price of $25 billion or $3.25 per share.