National City to Cut 900 Jobs

January 2, 2008 No Comments »

National City said today that is plans to eliminate 900 jobs as it shutters its flagging wholesale mortgage division.

The layoffs are in addition to the previously announced 2,500 job cuts, and will affect about fifteen percent of the company’s remaining 6,274-employee mortgage workforce.

“We remain committed to the mortgage business, as the home mortgage is an essential consumer product,” said Peter Raskind, chairman, president and chief executive officer of National City.

“However, it is clear that the origination volumes will be lower going forward, and we are configuring our mortgage business to operate profitably in that environment.”

The company said loan volume will likely fall more than 50 percent in 2008 as the company focuses on lower-risk offerings through its retail channel.

National City now expects to make about $15 billion to $20 billion in mortgage loans in 2008, compared to $43.9 billion through the first 11 months of 2007.

The Cleveland-based bank and mortgage lender will also cut its quarterly dividend to 21 cents per share from 41 cents, breaking a 15 year run of steady increases.

“It’s part of a broader set of strategies to manage the capital position, and navigate through a very difficult period for the entire industry, and beyond,” Raskind said.

“Pressure in the housing market is not going to abate any time soon.”

And in an effort to shore up capital, the struggling bank revealed that it has hired Goldman Sachs as an adviser.

Last summer, the bank merged its home equity loan unit into National City Mortgage, closed its correspondent lending division, and eliminated the origination of all nontraditional loans.

Shares of National City were down 90 cents, or 5.47%, to $15.56 in early afternoon trading on Wall Street, marking a fresh 52-week low.

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