National City to Trim Dividend by 49%, Cut 900 Jobs

from Bloomberg:



National City to Trim Dividend by 49%, Cut 900 Jobs (Update5)

By David Mildenberg

Jan. 2 (Bloomberg) -- National City Corp. fell to its lowest price in 12 years after Ohio's largest bank said it will eliminate 900 jobs and halve the quarterly dividend, the first reduction since the payout began in 1935.

The lender plans to raise capital and hired Goldman Sachs Group Inc. as its adviser, Cleveland-based National City said today in a statement. The bank is halting home loans through brokers and firing people who handle that business, bringing total cuts in 12 months to 3,400, or 10 percent of the staff.

National City is still reeling from the U.S. housing slump a year after selling its subprime mortgage unit. Chief Executive Officer Peter Raskind said in an interview today that home price declines in California are hurting results. The company now expects to make $15 billion to $20 billion in home loans in 2008, compared with a previous projection of $35.7 billion.

``The housing market was poised for a correction and then it corrected with a high degree of suddenness,'' Raskind said. ``It's not clear to me that anything can be done prudently to dramatically improve that process.''

The bank fell 87 cents, or 5.3 percent, to $15.59 in 4:01 p.m. New York Stock Exchange composite trading, the biggest drop in three weeks. The stock lost 55 percent in 2007. .....(more)

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