Jan 3, 2008 2 min read

CLEVELAND (AP) – Regional bank National City Corp. said Wednesday it is slashing its dividend by half and shutting down its wholesale mortgage division, eliminating 900 jobs, due to weakened housing and credit markets. The news sent National City shares down 5.3 percent, or 87 cents, to close at $15.59 Wednesday. The stock had hit a new 52-week low of $15.45 earlier in the day. The shares have been as high as $38.94 in the past year.

National City also said in a statement it plans to raise new capital during the first quarter and has hired Goldman Sachs and Co. as its capital adviser.

The job cuts announced Wednesday bring to 3,400 the number of jobs eliminated in recent months as National City restricted mortgage originations to focus on prime-rate borrowers with solid credit histories. Despite leaving the wholesale lending business, National City will continue to originate loans through its retail banking offices.

National City has been hit hard in recent months because of rising delinquencies and defaults among mortgages and a severely declining housing market. It had increased its dividend at least once every year since 1993.

“We fully recognize that the dividend is an important element of return for shareholders, and we did not take the decision to reduce it lightly,” said Peter Raskind, National City’s chairman and chief executive.

The action was needed to help National City remain competitive, he said.

The dividend was reduced to 21 cents per share from 41 cents per share, payable Feb. 1 to shareholders of record as of Jan. 14.

Cleveland-based National City operates 1,400 bank branches in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri, Pennsylvania and some other markets.

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On the Net:

www.NationalCity.com.

AP-ES-01-02-08 1623EST