National City to raise $7 billion

National City Bank got the OK to raise $7 billion in an equity sale that will increase outstanding shares more than three-fold in a move to shore up it’s balance sheet.  Investors watching their shares diluted had little choice but to approve the equity sale to keep the bank solvent in the midst of the credit crunch.  National City is one of a handful of super-regional banks who have been put on the ropes by the mortgage meltdown.  

From Reuters:

National City Corp (NCC.N: QuoteProfileResearchStock Buzz), a U.S. Midwest regional bank battered by mortgage losses, has won stockholder approval to authorize new shares to allow for a $7 billion capital infusion, the bank said on Monday.

The new capital gives National City “the necessary flexibility to address current market challenges,” Chief Executive Peter Raskind said. He added that the bank has no exposure to Lehman Brothers Holdings Inc (LEH.N:QuoteProfileResearchStock Buzz), the Wall Street bank that filed for bankruptcy protection, and has routine derivatives contacts with Lehman’s broker-dealer unit.

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AIG to announce massive restructuring

AIG, hammered by poor mortgage bets, will announce a massive restructuring on Monday.  The restructure could include the sale of its $50 billion aircraft-leasing division to help provide liquidity to the company.  The insurer remains exposed to subprime-backed derivative exposure and has faced massive losses in mortgage-related debt writedowns.  The company is also facing pressure from a tanking stock rating and a threat to its ratings by the major Wall Street rating agencies.

More about the AIG restructuring from CNNMoney.com:

American International Group, the nation’s largest insurer, plans to unveil a restructuring plan that will include selling off part of its business to raise cash and boost investors’ confidence, according to a published report.

The company is likely to dispose of its aircraft-leasing arm, International Lease Finance Corp., which has a fleet of more than 900 airplanes valued at more than $50 billion, the Wall Street Journal reported Sunday.

The aircraft unit is the largest single customer of both Boeing Co. (BAFortune 500) and European Aeronautic Defence & Space Co.’s Airbus.

The ailing company, which had planned to announce a turnaround strategy on Sept. 25, is being forced to accelerate the announcement after investors fled the stock last week.

Shares fell 31% on Friday after plummeting earlier in the week. The company’s stock is down a total of 79% this year.

Late Friday, credit rating agency Standard & Poor’s warned that it might downgrade AIG’s debt.

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