well Bear Stearns needed "help" so I can't imagine any bank being in the place to buy another especially when most banks have a mortgage problem to clean up.

 

Most banks are still making profits, despite losses. During recession and gloom the strong eat up the weak. It's important to recognize that a US recession is a global recession and effects international markets more than us. Countries with large amounts of reserves absolutely will inject cash into banks to keep reserves in check. If China and Japan have trillions of US dollars in reserves, banking collapses and the dollar tanks, they're not going to sit idle as their wealth goes down the toilet.  Japan, Europe, Saudi Arabia, etc. race to prop up international banks. Bear Stearns is one of only a few banks operating on a net loss. Bear Sterns would easily be swallowed by hedge funds or government-led investment funds. Banks will have poor liquidity in investment and lending issues for a few years but hedge funds and government do NOT. Our tanking markets lead to triggered overpriced oil as people rush to natural resources and commodities. Then rich Arabs rush to buy out or invest in the worlds biggest, most powerful banks with their excess cash.

 

Bear Stearns was a dishonest and incompetent corporation by the way.

Charter One not too long ago and now potentially National City?  That "giant sucking sound" on the North Coast is getting louder!  Can we not compete?

That just in from our Financial Analyst David!

Bear Stearns was a dishonest and incompetent corporation by the way.

"Charter One not too long ago and now potentially National City?  That "giant sucking sound" on the North Coast is getting louder!  Can we not compete?"

 

Charter One was acquired by RBS/Citizens because they were doing well and wanted a sale. National City is floundering and wants a bail-out.

Hmmm ... possibly 5/3 can step in?  :| ;)

 

I knew I could count on you for awaiting another 5/3 takeover.  I'm hoping that 5/3 goes after somebody like SunTrust or Nations Bank.  Both would provide significant expansion into the South.  I think that 5/3 wouldn't have all that much to gain from a NatCity takeover...but it would eliminate a huge chunk of their Midwest competition.

 

I just want to correct my statement...I meant to say Regions Bank NOT Nations Bank.  They all sound the same after a while.  :-D

OUCH!

 

National City shares trade sharply lower

 

Posted by Teresa Dixon Murray March 17, 2008 10:31AM

Categories: Banks, Breaking News

 

Fear of more problems in the banking industry pushed shares of National City Corp. today to their lowest level since 1991.

 

The Cleveland-based bank had lost 44 percent of its market value by 2:30 p.m., with shares trading around $7.30.

 

More at cleveland.com

http://blog.cleveland.com/business/2008/03/national_city_shares_trade_sha.html

sounds like it's time to buy some national city.  :wink:

nobody who can afford to buy it would want to take on that mess. National City will not fail (the fed wont let it) but the shareholders will not be saved by a buyer anytime soon either.

I say buy a few shares when low.  They will rebound. 

 

Hopefully, it will be like my MSO stock.  Bought those puppy's when they were like $4 and sold when they rose up to $30. 

I spoke with someone last night about NatCity (where he and his wife bank).  He is in the financial fields and informed me that both he and his wife are going to pull their money out of NatCity.  This has been something they have debated, but with the recent credit rating drop and other bad news they are ready now.  Hello Schwabb.

I hope the FED comes through for National City or that they get bought out by a bigger bank soon, for Cleveland's sake. The problem is that investors are aware that the bottomed out heavyweights are a sure bet because of their liquidity. Smaller banks get hit harder.

I spoke with someone last night about NatCity (where he and his wife bank).  He is in the financial fields and informed me that both he and his wife are going to pull their money out of NatCity.  This has been something they have debated, but with the recent credit rating drop and other bad news they are ready now.  Hello Schwabb.

 

The consumer deposit segment of the bank is not at all affected by any of this.  Its their exposure to their mortgage side that is the driver here.  If you don't like NCC's services or product lines and want to pull your money b/c of that; OK.  But to take your money out of your checking/ savings/CD/IRA because of this drop in stock price is, well, that's not a reason to pull your funds.

SHS great answer. 

 

Besides, who is to say that NC wont just spin off /sell of the mortgage business.  I love the "doom and gloom" conspiracy theories.

Like I said, they were considering this prior to the recent bad news on NatCity.  Overall they just didn't like the returns they were getting on their money...hence why they're pulling out of NatCity and going to Schwabb not something like 5/3.  This news is more or less the proverbial straw that broke the camel's back.

I spoke with someone last night about NatCity (where he and his wife bank).  He is in the financial fields and informed me that both he and his wife are going to pull their money out of NatCity.  This has been something they have debated, but with the recent credit rating drop and other bad news they are ready now.  Hello Schwabb.

 

The consumer deposit segment of the bank is not at all affected by any of this.  Its their exposure to their mortgage side that is the driver here.  If you don't like NCC's services or product lines and want to pull your money b/c of that; OK.  But to take your money out of your checking/ savings/CD/IRA because of this drop in stock price is, well, that's not a reason to pull your funds.

Yeah and all of those (I think except for IRA) are FDIC insured for $100,000. You can't lose, except to inflation.

 

I sure wish I had the money to invest on ignorant overreactions in the market. I'd be so rich!!

IRAs are not insured like savings accounts and what not.  Hence the fear of investment banks like BearStearns failing.

 

Furthermore, the lowering of NatCity's credit rating and the drop in stock price aren't alone enough reason to pull your money, but those occurances are enough to make people lose faith in their bank.  People want to have their money in the best banks, where they can get the best return on their money.  The lowering of NatCity's credit rating and drop in stock price certainly don't sure up any business that might have already been on the edge of moving their money (i.e. my friend).

Yeah, my primary account is with National City and I am deeply worried about the bank's long-term potential, especially as its stock halved to ~$6.00 today. I expect it to stabilize or decrease just slightly today.

IRAs are not insured like savings accounts and what not.  Hence the fear of investment banks like BearStearns failing.

 

Correct.  But your bank really has nor bearing on how your investments within your IRA are managed.  I mean if you just let your adviser dictate what to do and take no accountability of it, then yeah, that is "the bank".  Personally, I think that's just one person rather than "a bank".  Besides, National City is not managing the funds in your investments (that would be Vanguard, Fidelity, or whatever funds you are invested in) and the downturn in the market (re: your slumping IRA) is across the board and not specific to any one bank.  So your Templeton International Foreign Equity Fund is going to be down 5.71% QTD regardless if your IRA is with Key, National City, 5th Third, etc. 

 

If this is a concern for your friend, they would be better to move the money into a stable value fund, take the 1-2% growth, and stay away from stocks and mutual funds all together.  Changing banks is not going to change your IRA performance.

 

Furthermore, the lowering of NatCity's credit rating and the drop in stock price aren't alone enough reason to pull your money, but those occurrences are enough to make people lose faith in their bank. 

 

I guess I'll stop right there as those occurances may be making people lose faith in their bank, but it shouldn't be.  One doesn't have a whole lot to do with the other.  If you can get a better rate on a CD elsewhere, they why wouldn't you take the better rate?  But the drop in stock price isn't going to change the existing rate on your CD.  Nor are your funds in your checking or savings account at all in jeopardy.

 

When you're talking about "best return on your money" then you shouldn't even be looking at banks.  You should choose a bank based on the products and services it offers; it's a savings instrument and a place to keep money safe.  Choosing a bank is not an investment strategy or wealth building system.

^I agree with you on everything...all this bad news is making people feel uncomfortable.  Bank failure is not a distant memory for all, and even though they are insured doesn't mean that their worries are unsubstantiated.

 

And yes, my friend is moving his money from NatCity to a Schwab savings account that pays pretty decent interest if you have enough money or have other money invested with Schwab.

 

With the way things are heading right now, investment portfolios are not looking too hot.  It may be a good time to diversify a little bit more over the next few years.  We haven't had a consumer recession really since 1991...there are a lot of deep cuts that need to heal with our economy and Bernake is doing everything he can to delay the inevitable until the next administration rolls in.

if your investments are with Nat City Investment - that essentially is a separate company from the actual National City "Bank" - and is safe and secure from any of the volatility in the Bank itself.

 

Although downgraded, NCB remains an "investment grade" company with deposit grades affirmed at P1, which I believe is the best rating short term deposits can get.  Also, even though the market reacted extremely hostile yesterday to NCB, the Bank remains well capitalized and continues to be a major seller of Fed Funds and does not have a liquidity problem that you saw take down Bear Stearns.

 

To speculate that something drastic is imminent, is only rumor.

 

Also, NCB is over 160+ years old and has survived through a Civil War, the Great Depression, 2 world wars, and multiple recessions.  It is likely NCB will make it through the current turmoil.

[note: obviously a nat'l perspective, but very relevant to NCB and our local banking/foreclosure problems]

 

http://www.nytimes.com/2008/03/21/opinion/21krugman.html?_r=2&oref=slogin&oref=slogin

 

Partying Like It’s 1929

 

By PAUL KRUGMAN

Published: March 21, 2008

 

If Ben Bernanke manages to save the financial system from collapse, he will — rightly — be praised for his heroic efforts.

 

 

Why does the financial system need salvation?

 

Why do mild-mannered economists have to become superheroes?

 

The answer, at a fundamental level, is that we’re paying the price for willful amnesia. We chose to forget what happened in the 1930s — and having refused to learn from history, we’re repeating it.

 

Contrary to popular belief, the stock market crash of 1929 wasn’t the defining moment of the Great Depression. What turned an ordinary recession into a civilization-threatening slump was the wave of bank runs that swept across America in 1930 and 1931.

 

 

Mr. Bernanke and his colleagues at the Fed are doing all they can to end that vicious circle. We can only hope that they succeed. Otherwise, the next few years will be very unpleasant — not another Great Depression, hopefully, but surely the worst slump we’ve seen in decades.

 

Even if Mr. Bernanke pulls it off, however, this is no way to run an economy. It’s time to relearn the lessons of the 1930s, and get the financial system back under control.

 

National City Reviews Its Options

By M.R. Kpopko, Associated Press, Houston Chronicle, April 1, 2008

 

CLEVELAND — National City Corp., a Midwestern bank heavily exposed to the worsening mortgage and housing market, confirmed Tuesday that it is reviewing its options amid rumors that it wants to find a buyer.

 

New York investment bank Goldman Sachs has been hired to look into strategic alternatives, the Cleveland-based bank said.

 

National City has not confirmed that it is seeking a buyer and did not elaborate on what alternatives are being considered.

 

On Jan. 2, National City cut its dividend 49 percent and said it was shutting down its wholesale mortgage division, eliminating 900 jobs. It has slashed about 3,400 jobs in recent months as it refocuses on borrowers with solid credit histories.

 

IRAs are not insured like savings accounts and what not.  Hence the fear of investment banks like BearStearns failing.

IRAs are just type of account.  Investments in IRAs can be federally insured, if they are backed by the FDIC or NCUA (National Credit Union Administration).  These would include CDs and high-yield savings accounts offered by banks, thrifts and credit unions.  Other IRA investment choices include stocks, bonds, mutual funds and other securities which typically aren't backed by the full faith and credit of a U.S. government agency.

^How many people do you know with IRAs have their IRA tied to a CD and/or "high" interest savings account?

If you can have a high yield savings account under an IRA then I'm guessing it's for tax reasons. You can easily withdraw money from a savings account, perhaps it allows more flexibility within your IRA which is meant for people to make contributions until retirement. IRAs are tax deferred whereas high yield savings accounts require you to report capital gains.

That's why I have all my money in off-shore accounts to avoid that whole mess.

Thank you all for sharing your financial plans, but the thread is about National City Bank. That said:

 

From crainscleveland.com:

http://www.crainscleveland.com/article/20080402/FREE/932345337/1099&Profile=1099

 

WSJ: National City, KeyCorp consider combination

 

By STAN BULLARD

 

8:53 am, April 2, 2008

 

National City Corp. (NYSE: NCC) is considering a sale of itself to cross-town rival KeyCorp (NYSE:KEY) , The Wall Street Journal is reporting this morning.

 

The report, which cites anonymous sources, comes just one day after the beleaguered banking company said it has retained investment banking firm Goldman Sachs to advise it on a range of so-called "strategic alternatives."

 

Richard Bove, bank analyst with investment bank Punk, Ziegel & Co., said in an interview with Crain's on Monday that “massive job losses at National City would occur” if a Key-National City merger was to take place as the two companies both have large administrative staffs in the Cleveland market.

 

Mr. Bove said a Canadian bank also could emerge as a potential buyer for National City because of the interest of some Canadian banks in building a presence in the Midwest. He specifically cited BMO Financial Group, parent company of Bank of Montreal; it bought the former Harris Bankcorp Inc. of Chicago in 1984.

 

Mark Dodosh contributed to this story.

.................

 

Needless to say that would be pretty horrific for National City, especially on a local level.

Bad news for Cleveland..

^ So, I guess you guys are hoping that another bank other than Key buys NatCity then, right?

 

 

That sucks about the "massive job loss" scenario ... no one wants to see that.

 

 

I wish the article would go more in depth over why Key would be interested in buying out NatCity in the first place?

I really don't see how this would work out.  Key and Nat City share much of the same Midwest territory, it does not seem to be a logical takeover target.  Plus, Key has gone out of their way to largely avoid the sub prime mess, why jump in now?  Do they possibly envision another government bailout a la Bear Stearns?

Key's goal is to eliminate competition.  The article is right in that it would be terrible news for Cleveland.

Largest Cuyahoga County Employers

Ranked by full-time equivalent as of 01/01/2006

Cleveland Clinic 27,755

University Hospitals System 16,611

Progressive Corp. 9,017

Keycorp 6,397

National City Corp. 6,051

Metrohealth System 5,503

Case Western Reserve University 5,075

Ford Motor Co. 4,910

Sherwin-Williams Co. 3,176

Continental Airlines 2,892

Giant Eagle Inc. 2,857

General Motors Corp. 2,549

Note: Federal, State, and City government employers were deleted from this list.

Source: Book of Lists. Cleveland, Ohio: Crain's Cleveland Business, 2007.

 

Yikes...6,051 employees, fifth largest employer in Cuy County

I really don't see how this would work out.  Key and Nat City share much of the same Midwest territory, it does not seem to be a logical takeover target.  Plus, Key has gone out of their way to largely avoid the sub prime mess, why jump in now?  Do they possibly envision another government bailout a la Bear Stearns?

 

As Hts44121 says, when banks go through mergers/acquisitions - there are usually two goals: growth, and killing the competition. Some M&As result in more of one than the other, but in the case of Key and National City, it would be heavily skewed toward the latter. You don't try to kill your competition when they're at the top of their game, you get them when they're "weak". On the retail level, Key and National City's retail footprint involves a lot of overlap in the Midwest, although Key's is much more dispersed from east to west. The green represents National City's presence, the red is Key:

 

 

So if this goes through, Key kills off a lot of National City's overhead and gains retail presence in Pennsylvania, Illinois, Missouri, and Florida.

And second-largest downtown employer.

^Excluding government workers.

And A LOT of their 6,000+ employees do not work downtown but rather at the individual branches.  Completely a guess, but I would say that Key would probably be able/want to keep about half of those employees.  They are not going to just close all the branches and fire ALL the employees.  A good majority of the branches will become Key branches in hopes of retaining the customer base that NCB has.  Some of the branch buildings might get sold to other banks.  E.g., when Tops sold to Giant Eagle, Zagara's took over a couple of their locations (such as Richmond/Monticello).

 

I just really hope the Federal Gov't steps in here.  However, with our luck, NCB will be sold and the government will wait for some southeastern bank to get in trouble before lending a hand.  There are other areas of the country that could easily sit back and watch a couple thousand jobs leave their economy.... but not us.

Damn,    when I first heard Key was involved, I immediately thought that would be the best scenario for NC and C-land.   

 

I don't know what to say......        This sucks!!   for C-land, Ohio, and all of us as customers.

 

 

National City Talks to Key

 

Credit Crunch Drives Ohio Banks to Consider Idea Dismissed in Past

 

By ROBIN SIDEL and VALERIE BAUERLEIN

April 2, 2008; Page C1

 

As National City Corp. tries to dig itself out from deepening loan problems, one option is getting some unexpected consideration: turning to a neighbor for help.

 

The big Ohio bank is considering a plan to sell itself to hometown rival KeyCorp., according to people familiar with the matter.

 

Such a transaction would be complicated by a range of factors and is far from certain to take place. If it is to occur, the resulting combined entity could also receive a capital infusion from private-equity behemoth Kohlberg Kravis Roberts & Co., these people said.

 

A deal with Key is one of several options on the table at National City, which has seen its stock fall more than 70% in the past 12 months amid concerns about its viability as mortgage delinquencies rise. One person familiar with the matter warned that such a deal would be fraught with difficulty, but also said, "You can't rule out any possibilities, because they're all long shots."

 

The prospect of a deal between National City and Key highlights how the banking industry's strain is forcing institutions to consider things that were once off-limits. The two Cleveland-based banks have long been the subject of merger rumors that both have dismissed.

 

 

 

Key, meanwhile, has largely avoided the types of mortgage and home-equity loans that weigh on National City.

 

 

National City has 1,300 branches in 13 states, led by Ohio, Florida and Illinois. Key has 955 branches in 13 states, with more than a third of those in the Northwest and Rocky Mountain regions. National City has 32,000 employees to Key's 18,500 employees. National City has deep roots in Cleveland, where it was founded in 1845. Key moved its headquarters there with the acquisition of Cleveland's Society Corp. in the mid-1990s.

 

In the past two years, National City has spent more than $4 billion to purchase community banks in Florida and Chicago, while Key has largely stayed off the acquisition trail.

 

Cultural issues -- such as the combined bank's potential name and whose executives would be in charge -- are potential obstacles. But similar cultural questions didn't stop the merger of Birmingham, Ala., rivals Regions Financial Corp. and AmSouth Bancorp two years ago.

 

National City had long maintained that it could stay independent, but Chief Executive Peter E. Raskind surprised analysts at a September investor conference when he said the company would need to be "materially larger" to remain competitive.

 

 

 

--Peter Lattman contributed to this article.

 

Write to Robin Sidel at [email protected] and Valerie Bauerlein at [email protected]

It is pretty clear that NCB dug its own grave. It would hurt throughout the state, as NCB retains a decent share of the Cincinnati market through its relatively recent purchase of Provident Bank. They got Provident when it got all messed up over some loans for airplanes and some other risky industries as I recall. Uncle Carl also decided he didn't really need a bank anymore, though I imagine he has a decent sized state in NCB as that is usually how he does business.

Bad news for Cleveland if this goes through...hopefully something better can be worked out for Cleveland's sake.

Part of the reason why NCB is so attractive is because they still have a stake in Visa's new IPO. They sold a third of the stock like half a month ago and reported 530 million in capital gains. Visa is rapidly expanding in emerging markets overseas, such as China, where debit/credit transactions are becoming more prevalent.

It makes the most sense for Wells Fargo to buy National City.  It would probably keep most of the jobs in Cleveland which could serve as their midwest hq.  The only overlap in branches might be in Indiana and Illinois.

Any merger with a US bank, regardless of it being Key or Wells Fargo, would involve significant layoffs.  A foreign bank merger would involve less as there is less synergy to be had.

 

The issue with Key, particulalry in Cleveland, is some branches would have to close and some customers would have to be divested.  Antitrust issues would arise and the government would not allow one bank to have that level of market share - hence customers would have to be sold to other banks.  So while a Key merger would be the worst case scenario from a jobs/local economy standpoint, any merger would involve layoffs.

 

The best case scenario for the area would be to raise capital from private equity firms.  This would be the most transparent to the bank. 

 

It's just a matter of what the board/executives decide to do...both options are equally feasible.  Either way, there is an executive board meeting Monday and I think board elections are on April 22nd, so whatever happens, is going to happen fast.

5/3 in hunt for NatCity?

BY ALEXANDER COOLIDGE | CINCINNATI ENQUIRER

April 3, 2008

 

CINCINNATI - Fifth Third Bancorp is the latest in the line of potential suitors for distressed National City, according to news reports today.

 

Reuters reported the Cincinnati-based regional bank is in preliminary discussions with National City about acquiring the Cleveland-based regional bank, which has been battered by its exposure to subprime loans and the foreclosure crisis.

 

 

National City, Ohio’s largest bank with $30.6 billion in deposits and 411 branches, has not-too-quietly been shopping all or part of itself around for months as its stock price has sunk by nearly three-quarters in the last year as its loan portfolio and profits deteriorated. This week it disclosed it hired Goldman Sachs to examine “strategic alternatives” – it had previously tapped the New York firm as a capital adviser in January.

 

 

This is just a play because 5/3 fears what would happen if Key were to grow it's presence like that here.  Come on bring in Citigroup next so that we who do international work can get some international loving.

5/3?? NO!!

Anybody have any insights as to what would be better for OHIO and the existing workforce and number of jobs in the state?  Would it be better for Key or 5/3 to have it?

It'd be best if neither acquire National City.  I wonder what Bank is going to be rumored next - First Federal of Lakewood?  Maybe even Community Bank of Milan?

 

Seriously - Key and 5/3 have historically been inferior institutions to National City and it's such a shame that things have gotten they way they have for NCB when a take-under by Key or 5/3 is even considered a posibility. 

 

I still am looking at a buyer to be a larger institution like Wells Fargo or JPMorgan - however i'm begining to think that a piece-by-piece sale of business units as a possiblity.  however, this has never occured before and who knows if NCB is capable of pulling that off.

The challenge with a break up is that no wants NCB's mortgage business, except if it looks like the whole bank will go under and then the feds will probably take it. No need to repeat '31 in Toledo across the whole Midwest.