By Cory Schouten, The IBJ
cschouten@ibj.com
Shares in National City Corp., the city's second-largest bank, plummeted by more than 60 percent this morning before recovering some of their losses as Wall Street began betting on which bank will fall next.
Cleveland-based National City, which has 77 branches and about 1,400 employees in the Indianapolis area, traded at $2.05, down 44.5 percent, today. Earlier this morning, the stock dropped as low as $1.30.
The crisis in confidence for banks continued to spread today even as Congress appeared headed toward approving a $700 billion bailout proposal.
This morning, Citigroup Inc. said it will acquire banking operations of Wachovia Corp. with help from the Federal Deposit Insurance Corp. And late last week, the federal government seized Washington Mutual Inc. and sold its bank branches and deposits to New York-based JPMorgan Chase, the largest bank in Indianapolis with 91 branches.
Cincinnati-based Fifth Third Bank, the third-largest in the Indianapolis area with 45 branches, also had a rocky ride in morning trading, falling 25 percent, to $12.11.
Meanwhile, Regions Financial Corp. slipped about 20 percent, M&I Corp. dropped about 8 percent and KeyCorp shed about 10 percent.
Gary Hentschel, the local president for Key, believes a sale of National City is a question of when, not if. He expects winners and losers among regional banks, but said most are in pretty good shape.
"Each day is new, but with the bailout package approved, hopefully that brings a little more stability to the markets," Hentschel said. "Right now it's more of a confidence issue on the part of customers."
He's seeing a lot of money moving between banks as customers seek to keep each account under the FDIC insured limits. So far, Key has been a net gainer in deposits by a narrow amount, Hentschel said.
"There will be a lot of survivors here, and we obviously plan to be one of them," he said.
National City and Fifth Third officials did not return telephone messages left by IBJ.