"History is a wonderful thing, if only it was true"

Friday, April 04, 2008

Compounding Errors not Interest?

Still not happy with my banking at 5th3rd, shopping for alternatives
Then I get home and see this

Wall St.Journal

Fifth Third Bancorp is considering a bid to buy its larger rival National City Corp., according to people familiar with the situation, in the latest sign of how stresses on the banking industry are pushing institutions to consider deals long believed far-fetched.

Such a move would create a Midwestern banking giant and stick a thumb in the eye of rival KeyCorp, which is also said to be weighing a bid. Fifth Third is based in Cincinnati, and National City and KeyCorp are both in Cleveland.

Banks and private-equity shops have been poring over National City's books in recent weeks, in large part to ascertain just how sketchy some $25 billion in high-risk assets on National City's books actually are, according to these people. Those assets include brokered home-equity and commercial-real-estate loans, as well as loans remaining after the sale of subprime lender First Franklin Financial Corp.

These risky loans are critical to the structure and price of any potential deal, because they directly affect how much capital a combined company would require. A bank such as Fifth Third, the 12th-largest U.S. bank by market value, potentially could buy National City outright if the loans were so-so. But if the loans were failing, Fifth Third or a similar acquirer likely would seek a capital infusion from a private-equity group to bolster its combined capital, according to people familiar with the situation.


Ego over customer service?

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