July 23, 2008 / 4:36 AM / 11 years ago

UPDATE 1-National City trying to sell money-management unit -WSJ

(Adds details about Fifth Third and KeyCorp)

NEW YORK, July 23 (Reuters) - National City Corp NCC.N is trying to sell its money-management unit, the Wall Street Journal reported in its online edition, citing people familiar with the matter.

National City is working with Morgan Stanley to shop Allegiant Funds, which manages about $30 billion.

Cleveland-based National City has large operations in Ohio, Michigan and Florida, all hard-hit by the nation’s housing problems. The bank has lost money in three straight quarters due to its exposure to mortgage and home equity lending.

In April, the regional bank raised $7 billion of capital from private equity firm Corsair Capital and other investors and in June, it entered into agreements with federal regulators concerning its asset quality and its ability to manage capital, risk and liquidity.

National City’s shares have fallen about 85 percent from the year’s high of $32.2.

The WSJ also said Fifth Third Bancorp (FITB.O), a large U.S. Midwest bank, is reviewing its options.

The Fifth Third Asset Management unit has about $22 billion in assets. Fifth Third’s shares are down 47 percent this year.

Another possible seller is KeyCorp (KEY.N), though the firm has resisted entreaties for its asset-management business, the paper said.

Key Corp’s Victory Capital Management unit manages $60 billion, including in its Victory mutual funds. The Ohio-based bank’s stock is down 51 percent this year.

Both Fifth Third and Keycorp swung to losses in the second quarter amid loan defaults and boosts in loan-loss provisions. (Reporting by Helen Chernikoff in New York and Dhanya Skariachan in Bangalore; Editing by Anshuman Daga)

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