PNC Financial Services Group yesterday agreed to sell 61 National City Corp. branches in Western Pennsylvania with deposits of $4.1 billion, moving the Pittsburgh bank closer to acquiring the troubled Cleveland-based bank.

The divestitures, which were expected, were ordered by the U.S. Justice Department because of antitrust concerns. Without them, PNC would have controlled nearly 53 percent of the bank deposits in Western Pennsylvania.

Under the terms of the agreement, PNC will divest 50 branches with deposits of $3.4 billion in five counties in the Pittsburgh region, in addition to six branches with deposits of $249 million in Erie County, four branches with deposits of $186 million in Crawford County and one branch with $120 million in deposits in Warren County.

Downtown, PNC will sell National City branches on Sixth Avenue, Smithfield Street and in Oxford Centre.

PNC is also required to divest half of National City's lending done to businesses with borrowing needs of more than $1 million in the Pittsburgh region and virtually all of that business in the Erie market.

Acting assistant attorney general Deborah A. Garza said the divestitures "will ensure that consumers, small businesses and middle-market businesses in that area will continue to have choice for banking services and to enjoy the benefits of competition."

The divestitures include the commercial loans linked to the branches. PNC is not required to sell branches in any of the other markets it serves.

National City had 217 branches in Western Pennsylvania with deposits of $13.6 billion as of June 30, according to the Federal Deposit Insurance Corp.

"The divestitures were expected," said PNC spokesman Fred Solomon. "This is an important step in PNC's acquisition of National City."

In a message to employees yesterday, National City said the 61 branches to be sold were selected by Justice Department officials based on their location and size. PNC expects to transfer control of the branches to new owners within 180 days of the completion of the merger, National City employees were told.

"When a branch is sold, its customers and employees generally become customers and employees of the buyer," the note said.

When PNC announced the acquisition Oct. 24, it said the merger would make it the nation's fifth-largest bank with deposits of $180 billion and 2,747 branches from New Jersey to Illinois as well as Florida. As part of the sale, the U.S. Treasury will purchase $7.7 billion in PNC preferred stock under the emergency legislation approved by Congress in October.

The Federal Reserve Board and shareholders of PNC and National City must still approve the transaction. The deal is expected to be completed by the end of the year.

Other banks with operations in Western Pennsylvania said they will take a look at the branches PNC will put up for sale. But they won't be able to say whether they would be interested in buying until they examine how the branches on the block would fit with their current branch networks.

"Obviously, we're interested," said Dollar Bank executive vice president Jeffrey Morrow.

S&T Bancorp senior vice president G. Robert Jorgenson Jr. said the Indiana, Pa., bank will also take a look. S&T has 55 branches in Western Pennsylvania.

Under terms of PNC's offer, National City shareholders will receive 0.04 PNC shares for each of the National City shares. Investors who put money into National City earlier this year in an effort to keep it independent will receive another $384 million in cash.

The acquisition was valued at $5.6 billion when it was announced. But PNC shares have fallen 37 percent since then, reducing the price tag to about $4.7 billion based on the 93 million shares PNC expects to issue to complete the transaction.

PNC shares fell 11 percent yesterday, finishing at $46.65, off $6.04. National City closed at $1.72, off 26 cents.