PNC Bank $100 New Customer Bonus May Spell Trouble
Author: Rob K. Blake
Published: August 15, 2008
PNC Bank owned by parent PNC Financial Services Group, Inc. (NYSE: PNC) is offering $100 new customer bonus to raise capital. Why does PNC Bank need a large influx of capital? This may spell trouble for the bank.
PNC Bank about six months ago ceased their home equity wholesale operation citing market conditions and high operating costs. It could also meaning PNC closed their home equity program because they finally realized their exposure to the higher default rates on home equity loans would cause significant losses down the road.
PNC Bank Raising Capital With Bonus Program
New personal checking account customers who make a direct deposit of $500 will get a $100 Bonus. The payout of the bonus will happen within 7 days of the first qualifying Direct Deposit as long as the Direct Deposit happens before the deadline of 9/30/08.
The key phrase there is “qualifying” Direct Deposit which they define as a Direct Deposit of a paycheck, pension, Social Security, or other regular monthly income made by an employer or outside agency.
A Brilliant Move - But For Whom?
Raising capital by enticing folks to regularly put money into PNC Bank is pure genius, but it smells fishy if you ask me.
The real question to ask is why does PNC Bank need to raise capital this way?
Is their balance sheet so out of whack they need a capital injection in a hurry?
Are all other methods of raising capital exhausted for PNC Bank?
Does PNC Bank see a wave of mortgage-related losses heading there way and need the money to stay afloat?
All good questions…of course, only time will give us the answers.
Good Luck!
Author: Rob K. Blake
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