National City for Sale?

April 1, 2008 No Comments »

for sale

National City confirmed today that its Board is currently considering an array of strategic alternatives for the future direction of the company, it said in a statement on its website.

The Cleveland-based bank and mortgage lender has retained Goldman Sachs as its advisor for the review, but noted that there was no assurance the review would result in any particular transaction.

There has been a lot of noise surrounding National City’s ultimate fate recently, with some speculating that Wells Fargo could scoop up the struggling bank after announcing it was open to a Fed-assisted deal.

But the Wall Street Journal mentioned that a buyout from cross-town rival KeyCorp or Fifth Third could be more likely.

Some had speculated that JP Morgan Chase was interested in a larger Midwest presence, but after rescuing Bear Stearns, that scenario grew less likely.

Accelerating mortgage losses have put a huge strain on National City over the last several months, forcing the lender to shut several of its home lending divisions.

In January, the flagging bank shuttered its wholesale mortgage division, resulting in 900 job losses while simultaneously announcing a fifty-percent cut to its dividend.

And months earlier, the bank halted correspondent lending, home equity loan lending, and eliminated the origination of nontraditional loans (subprime), leading to 2,500 layoffs in the process.

Shares of National City were up 4 cents, or 0.40%, to $9.99 in early afternoon trading on Wall Street.

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