National City to cut 4,000 jobs

National City Corp, a U.S. Midwest regional bank hard hit by the credit crisis, on Tuesday announced plans to slash 4,000 jobs and said rising reserves for soured mortgage and real estate construction loans led to its fifth straight quarterly loss.

The job cuts amount to 14 percent of the bank’s workforce and are expected to take place over three years. They are part of an efficiency program designed to save $500 million to $600 million annually by 2011.

Shares of National City fell 17 cents to $2.75 in premarket trading.

(ARTICLE CONTINUES BELOW)

Investors have pummeled the bank’s shares, which fell as low as $1.25 on September 29, amid concern that mounting loan losses might cause National City to run short of capital, and perhaps even fail. Core deposits fell $5.5 billion in the three months ended September 30 to $85.6 billion, in part because depositors withdrew balances in excess of FDIC insurance limits.

National City has said repeatedly in recent weeks that it has enough capital to make it through the current credit cycle without doing fire sales of any assets. Chief Executive Peter Raskind said the bank would consider participating in U.S. Treasury Secretary Henry Paulson’s plan to inject $250 billion into the banking system.

• A d v e r t i s e m e n t

“We are not expecting any particular respite environmentally in the foreseeable future,” Raskind said on a conference call. Still, he added, “We believe we’ll emerge from this difficult environment as a much stronger organization.”

National City’s third-quarter net loss was $729 million, or $5.86 per share, and compared with a loss of $19 million, or 3 cents, a year earlier.

Results reflected a $4.4 billion preferred dividend paid in September as part of a $7 billion capital-raising completed in April from Corsair Capital LLC and other investors.

Full article here