National City to Get $7 Billion from Corsair Capital

National City Corp may have found a good Samaritan in Corsair Capital LLC as sources familiar with the matter say that the Ohio's biggest bank and sub prime lender, may get $6 billion to $7 billion from the latter to bolster its balance sheet and bail it out of the current crisis.

Gerard Cassidy, a Portland, Maine-based analyst at RBC Capital Markets said, "Shareholders continue to get penalized. It's another major company going to the capital markets to enable them to survive in this incredibly deflationary environment."

National City Corporation, based in Cleveland, Ohio and founded in 1845, is one of the ten largest banks in America in terms of deposits, mortgages and home equity lines of credit.

The company’s core businesses include commercial and retail banking, mortgage financing and servicing, consumer finance, and asset management. In 2006, National City ranked among the 10 biggest originators of sub-prime mortgages, which are made to people with weak credit.

As of 2007, National City Corp. ranked number 188 on the Fortune 500 list, and 9th in terms of revenue in the commercial banks industry with total assets of about $140 billion and a market cap of $24.542.1 billion. However, due to the sub prime crisis, the bank ranks as the worst performer in the 24-member KBW Bank Index during the past 12 months.

As per the deal with Corsair, the investors will pay $5 a share, about 40% less than National City's closing price Friday and will own 9.9 percent of National City after the capital raising. Moreover, Corsair's vice chairman, Richard Thornburgh, will get a seat on National City's board.

Earlier in 2006, National City had sold off its sub prime loan unit, First Franklin Financial to Merrill Lynch & Co., as it contributed to a record loss. National City kept some of the loans made by First Franklin, but saddled it with losses.

The bank, which lost 78 percent of market value in the past year, climbed 8 cents to $8.41 in German trading today.