Regulatory Matters

12 Months Ended

Dec. 31, 2015

Regulatory Capital Requirements [Abstract]

Regulatory Matters

Note 19 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, 2015 and 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. Beginning in 2015, to qualify as “well capitalized”, PNC must have Transitional Basel III capital ratios of at least 6% for Tier 1 risk-based capital and 10% for Total risk-based capital, and PNC Bank must have Transitional Basel III capital ratios of at least 6.5% for Common equity Tier 1 risk-based capital, 8% for Tier 1 risk-based capital, 10% for Total risk-based capital, and a Leverage ratio of at least 5%. To qualify as “well capitalized” in 2014, regulators required insured depository institutions, such as PNC Bank, to maintain Transitional Basel III capital ratios of at least 6% for Tier 1 risk-based, 10% for Total risk-based and 5% for Leverage, and required bank holding companies, such as PNC, to maintain Transitional Basel III regulatory capital ratios of at least 6% Tier 1 risk-based and 10% for Total risk-based.

The following table sets forth the Transitional Basel III regulatory capital ratios at December 31, 2015 and December 31, 2014 for PNC and PNC Bank.

Table 130: Basel Regulatory Capital (a)
			Amount				Ratios
December 31
Dollars in millions				2015		2014	2015		2014
Risk-based capital
	Common equity Tier 1 (b)
		PNC	$	31,493		N/A	10.6	%	N/A
		PNC Bank		27,484		N/A	9.7		N/A
	Tier 1
		PNC		35,522	$	35,687	12.0		12.6	%
		PNC Bank		29,425		29,328	10.4		10.7
	Total
		PNC		43,260		44,782	14.6		15.8
		PNC Bank		36,482		37,559	12.9		13.7
Leverage
		PNC		35,522		35,687	10.1		10.8
		PNC Bank		29,425		29,328	8.7		9.2
(a)	Calculated using the Transitional Basel III regulatory capital methodology applicable to PNC during both 2015 and 2014.
(b)	For 2014, Common equity Tier 1 was not applicable to U.S. regulatory capital ratio requirements for "well capitalized."

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 $1.7 billion at December 31, 2015.

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, 2015, the balance outstanding at the FRB was $30.0 billion.