Sept 6 PNC Financial Services Group Inc
said it has started to wind down Market Street Funding LLC, an
investment vehicle that funds credit facilities for the bank's
clients by issuing short-term debt.
The decision is part of a strategy to diversify and extend
PNC's borrowing base in light of ongoing regulatory
developments, the company said in a filing with the U.S.
Securities and Exchange Commission. ()
The bank said in August that it had received a federal
subpoena and was being investigated by the Justice Department
over claims related to issuance of mortgage loans.
Market Street is classified as a variable interest entity
(VIE), owned by an independent third party and administered by
Financial firms have used VIEs in the past to finance
investments in subprime mortgage-backed securities while keeping
them off the company's books.
As part of the wind down, commitments and outstanding loans
of Market Street will be assigned to PNC Bank.
Market Street had $5.9 billion of commercial paper
outstanding as of June 30, PNC said in the filing.
PNC said it did not expect the wind-down, which will be
completed by the end of the fourth quarter, to have a material
impact on the bank's financial condition or results.
The company's shares have fallen 4 percent since the bank
disclosed the government probes in August. They closed at $73.35
on Thursday on the New York Stock Exchange.