PNC Financial Services Group Inc. on Tuesday said it will pay back $7.6 billion in bailout funds to the U.S. government, a sign of confidence in the financial system.

The financial services company, which operates dozens of bank branches in the Indianapolis area under the National City name, received approval to redeem the preferred shares held by the government under the Troubled Asset Relief Program, or TARP.

PNC becomes the latest bank to repay TARP money, following similar moves by Wells Fargo & Co. and Bank of America Corp., which repaid back their government loans last year.

To fund the repayment, PNC plans to offer $3 billion of its common stock and senior notes of up to $2 billion.

PNC will also use cash raised through a $2.31 billion sale of its global investment servicing business to Bank of New York Mellon Corp., which was announced earlier in the day.

The stock and business unit sale are part of the company's agreement with the government.

"With signs of an improving economic environment and stabilizing financial system, we believe now is the appropriate time for us to redeem the preferred shares held by the U.S. Treasury," James E. Rohr, chief executive officer of PNC, said in a statement.

PNC was among the better regional bank performers during the financial crisis, buying struggling rival National City Corp. in a 2008 deal that made the Pittsburgh-based bank the nation's fifth-largest by assets. PNC received government bailout funds to help with the National City deal.

PNC made a major push into central Indiana when it acquired Cleveland-based National City. When the merger was announced, National City was the second largest bank in the Indianapolis area, based on employment, and fourth largest by number of branch locations. Seventy-seven of the 172 branches National City operated in Indiana at the time were in the Indianapolis area.

PNC's profits have improved in recent quarters after its stock fell sharply in the final months of 2008 and the beginning of 2009, the worst period of the financial crisis. PNC shares tumbled 78 percent over five months to an 18-year low of $16.20 on March 6, 2009. Shares have since rebounded to above $50 per share.

Like nearly all banks, PNC has battled mounting loan losses as consumers struggle to repay debt. The bank reported last month that it wrote off more bad debt in the fourth quarter, adding more than $1 billion to cover soured loans, up 15 percent from the previous three months. PNC did say it saw early signs of improvement in its loan portfolio.

BNY Mellon was able to pick up the PNC unit just months after the business was put up for sale.

Robert P. Kelly, BNY Mellon chairman and chief executive officer, said he approached PNC "in a serious manner" regarding a deal several months ago, but the conversation started way before then.

"The first time I ever mentioned it to Jim that we were interested was two or three years ago," Kelly said. "Now was just the better time."

By buying the Wilmington, Del., business, BNY Mellon will add $855 billion in assets under administration and become the second-largest provider of fund accounting, administration and transfer agency services.

The business being acquired is known as Global Investment Servicing Inc., and it provides asset mangers and financial advisors with services such as custody, transfers and fund accounting.

PNC Global Investment Servicing serviced total fund assets of $2.3 trillion and has 4,450 full-time employees. Global investment services CEO Stephen Wynne will be retained.