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National City Shares Plunge On Solvency Fears

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The Associated Press

Published: July 15, 2008

CLEVELAND - Shares of National City Corp. plunged Monday amid broad fears about the health of the nation's regional banks, and the company was forced to issue a statement reassuring investors of its soundness.

The Cleveland-based regional bank said it has experienced no unusual depositor or creditor activity, and has more than $12 billion in excess short-term liquidity.

Investors have been worried about the solvency of some banks amid the sharp downturn in the mortgage market. Late Friday, the government seized IndyMac Bancorp, marking the second-largest failure of a financial institution in U.S. history.

National City has been among those hit hardest by rising mortgage defaults. It recently raised $7 billion in cash to shore up its capital base, which the bank said has helped it to maintain a strong capital ratio.

Shares of National City tumbled 65 cents, or 14.7 percent, to $3.77 late Monday. They had reached as low as $2.99 during the day, their lowest level in decades.

The New York Stock Exchange halted trading of National City's shares at 11:52 a.m. because of the bank's pending announcement. Shares resumed trading at 12:10 p.m.

National City spokeswoman Kristen Baird Adams said the statement was meant to quash speculation that "indicated that there was perhaps some kind of unusual activity at National City today."

National City, which operates largely in the Midwest, was among many bank stocks to tumble three days after the government stepped in to save failing IndyMac Bancorp.

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