National City 'seeks $7bn to shore up balance sheet'

21 April 2008

Exposure to the collapsed sub-prime mortgage market has led National City Corp to seek a cash injection to shore up its balance sheet, Bloomberg reports.

The Ohio bank might receive up to $7 billion from a consortium paying for shares at $5 each, a source close to the deal said.

This represents a significant coup for the group, headed by Corsair Capital - as this proposed share price is some 40 per cent below market value.

Under the terms of the deal, the consortium would own almost ten per cent of National City.

Commenting on the situation, Gerard Cassidy at RBC Capital Markets said: "It's another major company going to the capital markets to enable them to survive in this incredibly deflationary environment…shareholders continue to get penalized."

Corsair Capital - founded by JP Morgan in 1993 - has yet to comment on the putative cash injection.

Kristen Baird Adams, spokesperson for National City, also did not comment.

National City Corp is Ohio's biggest sub-prime lender.

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