PNC Financial Services Group and Riggs National declined comment yesterday on a report that the embattled Washington, D.C., bank was close to an agreement with federal regulators that would allow PNC to acquire Riggs.

The deal was announced in July and is scheduled to be completed by the end of April. However, it has been delayed by Riggs' regulatory problems stemming from investigations by the U.S. Department of Justice, the U.S. Treasury Department and other agencies over money laundering and other allegations.

PNC agreed to buy Riggs for stock and cash currently valued at about $737 million. The acquisition of Riggs would give it a beachhead in the prosperous Washington, D.C., market. Chairman and Chief Executive Officer James Rohr has said repeatedly that PNC would walk away from Riggs if the bank's problems made an acquisition too risky.

PNC spokesman Brian Goerke and Riggs spokesman Mark Hendrix declined comment on a Washington Post report yesterday that Riggs was close to resolving its issues with the Justice Department, which is conducting a criminal probe of the bank.

The bank paid a $25 million fine last year for its involvement in a money-laundering scheme involving Saudi Arabian diplomats. Riggs has said it believed that the investigations involved accounts related to former Chilean dictator Augusto Pinochet and Equatorial Guinea.

The banks also is a defendant in lawsuits seeking damages from parties allegedly tied to funding 9/11 terrorists.

Analysts had not heard of a pending Riggs settlement. But one said revelations that the bank had significant ties with the CIA increases the chances of such a settlement. The Wall Street Journal disclosed the relationship last week, citing U.S. officials and people familiar with the bank's operation.

"That changes the whole picture dramatically," said Dick Bove of Hoefer & Arnett. "If the government was in fact the reason this bank was doing a lot of the things it did, then the government is on the hook."

The purported link between Riggs and the CIA sent Riggs shares up 7 percent on Friday. They closed yesterday at $21.60, up 1 cent. PNC finished at $55.67, off 50 cents.