During 2013, PNC made an assertion under ASC 740 – Income Taxes that the earnings of certain non-U.
S.  subsidiaries were indefinitely reinvested.
As of December 31, 2013, the company had approximately $46 million of earnings and $39 million of foreign currency translation attributed to foreign subsidiaries that have been indefinitely reinvested abroad for which no incremental U. S.  income tax provision has been recorded.
If a U. S.  deferred tax liability were to be recorded, the estimated tax liability on those undistributed earnings and foreign currency translation would be approximately $29 million.
Retained earnings at both December 31, 2013 and 2012 included $117 million in allocations for bad debt deductions of former thrift subsidiaries for which no income tax has been provided.
Under current law, if certain subsidiaries use these bad debt reserves for purposes other than to absorb bad debt losses, they will be subject to Federal income tax at the current corporate tax rate.
The Company had a liability for unrecognized tax benefits of $110 million at December 31, 2013 and $176 million at December 31, 2012.
At December 31, 2013, $87 million of unrecognized tax benefits, if recognized, would favorably impact the effective income tax rate.
A reconciliation of the beginning and ending balance of the liability for unrecognized tax benefits is as follows: Table 149: Changes in Liability for Unrecognized Tax Benefits
## Table 0 ##
It is reasonably possible that the liability for unrecognized tax benefits could increase or decrease in the next twelve months due to completion of tax authorities’ exams or the expiration of statutes of limitations.
Management estimates that the liability for unrecognized tax benefits could decrease by $63 million within the next twelve months.
Examinations are substantially completed for PNC’s consolidated federal income tax returns for 2007 and 2008 and there are no outstanding unresolved issues.
The Internal Revenue Service (IRS) is currently examining PNC’s 2009 and 2010 returns.
National City’s consolidated federal income tax returns through 2008 have been audited by the IRS.
Certain adjustments remain under review by the IRS Appeals Division for years 2003 through 2008.
PNC files tax returns in most states and some non-U.
S.  jurisdictions each year and is under continuous examination by various state taxing authorities.
With few exceptions, we are no longer subject to state and local and non-U.
S.  income tax examinations by taxing authorities for periods before 2007.
For all open audits, any potential adjustments have been considered in establishing our reserve for unrecognized tax benefits as of December 31, 2013.
Our policy is to classify interest and penalties associated with income taxes as income tax expense.
For 2013, we had a benefit of $41 million of gross interest and penalties, decreasing income tax expense.
The total accrued interest and penalties at December 31, 2013 and December 31, 2012 was $45 million and $93 million, respectively.
NOTE 22 REGULATORY MATTERS We are subject to the regulations of certain federal, state, and foreign agencies and undergo periodic examinations by such regulatory authorities.
The ability to undertake new business initiatives (including acquisitions), the access to and cost of funding for new business initiatives, the ability to pay dividends, the ability to repurchase shares or other capital instruments, the level of deposit insurance costs, and the level and nature of regulatory oversight depend, in large part, on a financial institution’s capital strength.
The minimum U. S.  regulatory capital ratios in effect during 2013 under Basel I are 4% for Tier 1 risk-based, 8% for total risk-based and 4% for leverage.
To qualify as “well capitalized” under Basel I, regulators require banks to maintain capital ratios of at least 6% for Tier 1 risk-based, 10% for total risk-based and 5% for leverage.
To be “well capitalized” under Basel I, bank holding companies and banks must maintain capital ratios of at least 6% for Tier 1 riskbased, 10% for total risk-based and 5% for leverage.
At December 31, 2013 and December 31, 2012, PNC and PNC Bank, N. A.  met the “well capitalized” capital ratio requirements based on U. S.  regulatory capital ratio requirements under Basel I.
LOANS A summary of the major categories of loans outstanding follows.
Outstanding loan balances of $195.6 billion at December 31, 2013 and $185.9 billion at December 31, 2012 were net of unearned income, net deferred loan fees, unamortized discounts and premiums, and purchase discounts and premiums totaling $2.1 billion at December 31, 2013 and $2.7 billion at December 31, 2012, respectively.
The balances include purchased impaired loans but do not include future accretable net interest (i. e. , the difference between the undiscounted expected cash flows and the carrying value of the loan) on those loans
## Table 1 ##
(a) Includes loans to customers in the real estate and construction industries.
(b) During the third quarter of 2013, PNC revised its policy to classify commercial loans initiated through a Special Purpose Entity (SPE) to be reported based upon the industry of the sponsor of the SPE.
This resulted in a reclassification of loans amounting to $4.7 billion at December 31, 2012 that were previously classified as Financial Services to other categories within Commercial Lending.
(c) Includes both construction loans and intermediate financing for projects.
(d) Construction loans with interest reserves and A/B Note restructurings are not significant to PNC
bank holding companies and banks must have Basel I capital ratios of at least 6% for Tier 1 risk-based, 10% for total riskbased, and 5% for leverage.
The Basel II framework, which was adopted by the Basel Committee on Banking Supervision in 2004, seeks to provide more risk-sensitive regulatory capital calculations and promote enhanced risk management practices among large, internationally active banking organizations.
The U. S.  banking agencies initially adopted rules to implement the Basel II capital framework in 2004.
In July 2013, the U. S.  banking agencies adopted final rules (referred to as the advanced approaches) that modified the Basel II framework effective January 1, 2014.
See Item 1 Business – Supervision and Regulation and Item 1A Risk Factors in this Report.
Prior to fully implementing the advanced approaches established by these rules to calculate risk-weighted assets, PNC and PNC Bank, N. A.  must successfully complete a “parallel run” qualification phase.
Both PNC and PNC Bank, N. A.  entered this parallel run phase under the Basel II capital framework on January 1, 2013.
This phase must last at least four consecutive quarters, although, consistent with the experience of other U. S.  banks, we currently anticipate a multi-year parallel run period.
In July 2013, the U. S.  banking agencies also adopted final rules that: (i) materially modify the definition of, and required deductions from, regulatory capital (referred to as the Basel III rule); and (ii) revise the framework for the risk-weighting of assets under Basel I (referred to as the standardized approach).
The Basel III rule became effective for PNC on January 1, 2014, although many of its provisions are phased-in over a period of years, with the rules generally becoming fully effective on January 1, 2019.
The standardized approach rule becomes effective on January 1, 2015.
Tier 1 common capital as defined under the Basel III rule differs materially from Basel I.
For example, under Basel III, significant common stock investments in unconsolidated financial institutions, mortgage servicing rights and deferred tax assets must be deducted from capital to the extent they individually exceed 10%, or in the aggregate exceed 15%, of the institution’s adjusted Tier 1 common capital.
Also, Basel I regulatory capital excludes other comprehensive income related to both available for sale securities and pension and other postretirement plans, whereas under Basel III these items are a component of PNC’s capital.
The Basel III final rule also eliminates the Tier 1 treatment of trust preferred securities for bank holding companies with $15 billion or more in assets.
In the third quarter of 2013, we concluded our redemptions of the discounted trust preferred securities assumed through acquisitions.
See Item 1 BusinessSupervision and Regulation and Note 14 Capital Securities of Subsidiary Trusts and Perpetual Trust Securities in the Notes To Consolidated Financial Statements in Item 8 of this Report for additional discussion of our previous redemptions of trust preferred securities.
We provide information below regarding PNC’s pro forma fully phased-in Basel III Tier 1 common capital ratio under both the advanced approaches and standardized approach frameworks and how it differs from the Basel I Tier 1 common capital ratios shown in Table 18 above.
After PNC exits parallel run, its regulatory Basel III risk-based capital ratios will be the lower of the ratios as calculated under the standardized and advanced approaches.
Table 19: Estimated Pro forma Fully Phased-In Basel III Tier 1 Common Capital Ratio
## Table 2 ##
(a) Represents net adjustments related to accumulated other comprehensive income for available for sale securities and pension and other postretirement benefit plans.
Basel III advanced approaches risk-weighted assets were estimated based on the advanced approaches rules and application of Basel II.5, and reflect credit, market and operational risk.
Basel III standardized approach riskweighted assets were estimated based on the standardized approach rules and reflect credit and market risk.
As a result of the staggered effective dates of the final U. S.  capital rules issued in July 2013, as well as the fact that PNC remains in the parallel run qualification phase for the advanced approaches, PNC’s regulatory risk-based capital ratios in 2014 will be based on the definitions of, and deductions from, capital under Basel III (as such definitions and deductions are phased-in for 2014) and Basel I riskweighted assets (but subject to certain adjustments as defined by the Basel III rules).
We refer to the capital ratios calculated using these Basel III phased-in provisions and Basel I riskweighted assets as the transitional Basel III ratios.
We provide in the table below a pro forma illustration of the Basel III transitional Tier I common capital ratio using December 31, 2013 data and the Basel III phase-in schedule in effect for 2014.
The table below reflects the estimated effects on pension expense of certain changes in annual assumptions, using 2014 estimated expense as a baseline.
Table 29: Pension Expense – Sensitivity Analysis

<table><tr><td>In millions</td><td>2013</td><td>2012</td><td>2011</td></tr><tr><td>Balance of gross unrecognized tax benefits at January 1</td><td>$176</td><td>$209</td><td>$238</td></tr><tr><td>Increases:</td><td></td><td></td><td></td></tr><tr><td>Positions taken during a prior period</td><td>11</td><td>23</td><td>65</td></tr><tr><td>Positions taken during the current period</td><td></td><td>1</td><td>1</td></tr><tr><td>Decreases:</td><td></td><td></td><td></td></tr><tr><td>Positions taken during a prior period</td><td>-22</td><td>-51</td><td>-62</td></tr><tr><td>Settlements with taxing authorities</td><td>-48</td><td>-1</td><td>-10</td></tr><tr><td>Reductions resulting from lapse of statute of limitations</td><td>-7</td><td>-5</td><td>-23</td></tr><tr><td>Balance of gross unrecognized tax benefits at December 31</td><td>$110</td><td>$176</td><td>$209</td></tr></table>
<table><tr><td>Year ended December 31</td><td></td><td></td><td colspan="2">Change</td></tr><tr><td>Dollars in millions</td><td>2013</td><td>2012</td><td>$</td><td>%</td></tr><tr><td>Commercial lending</td><td></td><td></td><td></td><td></td></tr><tr><td>Commercial</td><td></td><td></td><td></td><td></td></tr><tr><td>Retail/wholesale trade</td><td>$15,530</td><td>$14,353</td><td>$1,177</td><td>8%</td></tr><tr><td>Manufacturing</td><td>16,208</td><td>14,841</td><td>1,367</td><td>9%</td></tr><tr><td>Service providers</td><td>13,052</td><td>12,606</td><td>446</td><td>4%</td></tr><tr><td>Real estate related (a)</td><td>10,729</td><td>10,616</td><td>113</td><td>1%</td></tr><tr><td>Financial services</td><td>4,927</td><td>4,356</td><td>571</td><td>13%</td></tr><tr><td>Health care</td><td>8,690</td><td>7,763</td><td>927</td><td>12%</td></tr><tr><td>Other industries</td><td>19,242</td><td>18,505</td><td>737</td><td>4%</td></tr><tr><td>Total commercial (b)</td><td>88,378</td><td>83,040</td><td>5,338</td><td>6%</td></tr><tr><td>Commercial real estate</td><td></td><td></td><td></td><td></td></tr><tr><td>Real estate projects (c)</td><td>13,613</td><td>12,347</td><td>1,266</td><td>10%</td></tr><tr><td>Commercial mortgage</td><td>7,578</td><td>6,308</td><td>1,270</td><td>20%</td></tr><tr><td>Total commercial real estate</td><td>21,191</td><td>18,655</td><td>2,536</td><td>14%</td></tr><tr><td>Equipment lease financing</td><td>7,576</td><td>7,247</td><td>329</td><td>5%</td></tr><tr><td>Total commercial lending (d)</td><td>117,145</td><td>108,942</td><td>8,203</td><td>8%</td></tr><tr><td>Consumer lending</td><td></td><td></td><td></td><td></td></tr><tr><td>Home equity</td><td></td><td></td><td></td><td></td></tr><tr><td>Lines of credit</td><td>21,696</td><td>23,576</td><td>-1,880</td><td>-8%</td></tr><tr><td>Installment</td><td>14,751</td><td>12,344</td><td>2,407</td><td>19%</td></tr><tr><td>Total home equity</td><td>36,447</td><td>35,920</td><td>527</td><td>1%</td></tr><tr><td>Residential real estate</td><td></td><td></td><td></td><td></td></tr><tr><td>Residential mortgage</td><td>14,418</td><td>14,430</td><td>-12</td><td>–%</td></tr><tr><td>Residential construction</td><td>647</td><td>810</td><td>-163</td><td>-20%</td></tr><tr><td>Total residential real estate</td><td>15,065</td><td>15,240</td><td>-175</td><td>-1%</td></tr><tr><td>Credit card</td><td>4,425</td><td>4,303</td><td>122</td><td>3 %</td></tr><tr><td>Other consumer</td><td></td><td></td><td></td><td></td></tr><tr><td>Education</td><td>7,534</td><td>8,238</td><td>-704</td><td>-9%</td></tr><tr><td>Automobile</td><td>10,827</td><td>8,708</td><td>2,119</td><td>24 %</td></tr><tr><td>Other</td><td>4,170</td><td>4,505</td><td>-335</td><td>-7%</td></tr><tr><td>Total consumer lending</td><td>78,468</td><td>76,914</td><td>1,554</td><td>2 %</td></tr><tr><td>Total loans</td><td>$195,613</td><td>$185,856</td><td>$9,757</td><td>5 %</td></tr></table>
<table><tr><td>Dollars in millions</td><td>December 31 2013</td><td>December 31 2012</td></tr><tr><td>Basel I Tier 1 common capital</td><td>$28,484</td><td>$24,951</td></tr><tr><td>Less regulatory capital adjustments:</td><td></td><td></td></tr><tr><td>Basel III quantitative limits</td><td>-1,386</td><td>-2,330</td></tr><tr><td>Accumulated other comprehensive income (a)</td><td>196</td><td>276</td></tr><tr><td>All other adjustments</td><td>162</td><td>-396</td></tr><tr><td>Estimated Fully Phased-In Basel III Tier 1 common capital</td><td>$27,456</td><td>$22,501</td></tr><tr><td>Estimated Basel III advanced approaches risk-weighted assets</td><td>290,080</td><td>301,006</td></tr><tr><td>Pro forma Fully Phased-In Basel III advanced approaches Tier 1 common capitalratio</td><td>9.5%</td><td>7.5%</td></tr><tr><td>Estimated Basel III standardized approach risk-weighted assets</td><td>291,977</td><td>N/A</td></tr><tr><td>Pro forma Fully Phased-In Basel III standardized approach Tier 1 common capitalratio</td><td>9.4%</td><td>N/A</td></tr></table>

Question: What is the average amount of Basel I Tier 1 common capital of December 31 2013, and Financial services of Change 2012 ?