PNC forced to improve risk management

Pittsburgh-based PNC consented to an SEC 'cease and desist' order to settle SEC accusations of regulatory reporting improprieties. PNC restated earnings on January 29 to reflect the consolidation of the joint venture special purpose entities, formed with AIG, in PNC’s financial statements. By agreeing to comply with the order, PNC is not admitting fault, and so James Rohr, chairman, president and chief executive officer of PNC, would not give specific details about the nature of the SEC’s complaint against the firm during an investors conference call on Thursday July 18.

However, Rohr did say PNC mandated consultancy firm McKinsey and Company to draft a blueprint for a risk management strategy that would make PNC “best in class”. An operational risk committee has been created, which will report to PNC’s board.

Rohr also announced that a new centralised risk management department has been created over the last quarter, which will be headed by Thomas Whitford, newly appointed chief risk officer. PNC has also created the position of chief regulatory officer and has hired John Wixted to the post. Wixted, who was formerly senior vice-president with the Federal Reserve Bank of Chicago, will co-ordinate all PNC’s regulatory and compliance activities.

Rohr said no fines or penalties will be levied on PNC over the alleged irregularities, and no further adjustments to its financial statements will be made.