"PITTSBURGH -- PNC Bank Corp., moving to reduce its vulnerability to rising interest rates, said it sold $1.8 billion in securities last month as part of a plan to shrink its investment portfolio by $5.9 billion by the end of 1995.</br></br>The bank-holding company said it will incur a $79 million loss for the fourth quarter from the recent sale of fixed-rate securities. It also said it won't replace a further $4.1 billion in securities that mature this year, reducing its total portfolio to about $17 billion by the end of 1995 from $22.9 billion at the end of the 1994 third quarter. The move will reduce PNC's total assets by 9.4%, to about $58 billion.</br></br>PNC indicated last fall that it would restructure its investment portfolio after steep interest-rate increases produced heavy securities losses. At the time, PNC said it expected those losses would cut 1994 fourth-quarter earnings by 7% and 1995 earnings by about 15%.</br></br>PNC isn't alone in selling securities because of rising interest rates. ""I assume virtually everybody is,"" said Dennis Shea, an analyst at Morgan Stanley & Co. ""Most banks are, I would believe, net sellers of securities right now. They're trying to reduce their liability-sensitive positions.""</br></br>To further reduce vulnerability, PNC recently bought interest-rate swaps with fixed payments and interest-rate caps. The new swaps and caps will cost PNC about $70 million in 1995 if rates stay the same, said Thomas H. O'Brien, chairman, chief executive and president. If rates keep rising, the cost of the swaps and caps will drop."
This example is no.