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January 4, 2008

US bank lowers dividend and reduces staff

by Richard Kilner

Story link: US bank lowers dividend and reduces staff

National City Corp, one of America’s largest banks, has stated it is to shed 900 staff and reduce its common stock dividend by 49%.

The move comes as the bank stops offering mortgages via brokers.

The firm has also hired Goldman Sachs to advise it, and intends to try and increase its capital to help it weather the credit crunch turbulence.

Peter Raskind, the chief executive, has said that National City Corp needs to act aggressively to handle the deteriorating market conditions.

The bank is amongst the ten largest in the US, and has 1,445 branches located predominantly in mid-western states. It is based in Cleveland.

National City is not the first or the only US bank to lower its dividend rates recently. Both Washington Mutual and IndyMac Bancorp have taken similar measures in the last two months, as has finance firm Freddie Mac.

As of November last year the bank employed 32,804 overall and 6,274 people in its mortgages staff, meaning that its drive to reduce staff will impact on approximately one in seven of its mortgage workforce.

The cessation of various types of home loans and the combining of the bank’s home equity and mortgage lending units saw the firm shed 2,500 in the latter half of last year.

 

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