This post is by a Minyanville contributor:
Why does this matter?
Because when losses come or common dividends are paid, they come out of common equity.
On Friday, when PNC Financial (NYSE: PNC) purchased National City (NYSE: NCC), PNC announced that thanks to the U.S. Treasury's purchase of preferred stock, the bank's Tier 1 ratio was increasing from 8.2% to 10%. At the same time, however, the bank disclosed that its tangible common ratio declined from 3.6% to 3.5%.
While it may not feel like it today, some day soon capital quality, not just capital volume, is going to matter.
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