EXCLUSIVE: PNC will repay TARP in 2010

NEW YORK/WASHINGTON (Reuters) - PNC Financial Services Group Inc plans to repay its $7.6 billion government bailout next year, but is in no rush after larger banks finalized plans to pay back the money in the last week.

"I don't see a rush," PNC Chief Executive James Rohr told Reuters in an interview on Wednesday. His comments came two days after Wells Fargo & Co sold $12.25 billion of stock, raising money to help it exit the government's Troubled Asset Relief Program.

Within the past week, Bank of America Corp repaid bailout funds, and Wells Fargo and Citigroup Inc announced plans to do so.

Rohr said Pittsburgh-based PNC is regularly talking to regulators and has not been pressured to repay the money it took from TARP.

"We'll pay it back next year for sure," he said, but he declined to specify when.

PNC received government aid to help fund its acquisition of Cleveland-based National City Corp at the end of last year.

Other large regional banks that remain in TARP include Cincinnati-based Fifth Third Bancorp, Cleveland-based KeyCorp, Regions Financial Corp in Birmingham, Alabama, and SunTrust Banks Inc in Atlanta.

EXPANSION PLANS

PNC, which is the fifth-largest U.S. bank by assets, has been regarded as one of the strongest banks during the financial crisis. Shares of PNC have climbed 5.8 percent since the start of the year to $52.84 on Wednesday, while the broader KBW Banks index is down 4 percent this year.

Rohr said that while PNC has been busy integrating National City this year, he expects to expand further. PNC will likely participate in future auctions for failed banks held by the Federal Deposit Insurance Corp, he said.

"We're always looking to try to expand market share in certain of our markets," he said, noting the bank will target places where it has less market share, such as in Florida, St. Louis and Chicago.

Separately, Rohr said he believes the economy is "bottoming out" but expects a slow recovery, with construction and real estate in particular likely to struggle through to 2011.

"Unemployment is still at 10 percent so it doesn't feel like we're doing great. It still feels like we're in a recession," he said.

Rohr was among top bankers that met with President Barack Obama on Monday to discuss financial reforms and the need to stimulate the economy by extending loans to small businesses. He said he believes PNC is already in line with the government on reform issues including compensation and that PNC has been lending aggressively to small businesses and modifying mortgages for struggling homeowners.

Rohr was cautious, however, about some lawmakers' interest in breaking up large banks that could pose a risk to the financial system, noting this could put U.S. banks at a disadvantage when competing with foreign banks in the United States.

"To the extent that we impede our financial services industry ... just because you don't like size, quite frankly (that) will drive customers to places where people are investing in new payments systems and new products," he said. "The pace of change has never been as rapid as it is today."

(Editing by Lisa Von Ahn, John Wallace and Steve Orlofsky)