National City Corp. confirmed Tuesday morning that it is “reviewing a range of strategic alternatives for the company,” as the bank has been sent reeling due to its exposure to residential mortgages. The language is usually used when a firm is considering a sale, although National City did not provide further details, but said it had retained Goldman Sachs as an advisor. National City sold its subprime origination platform, First Franklin Mortgage, to Wall Street bank Merrill Lynch in early 2007 for $1.3 billion, although Merrill recently shuttered the shop amid a historic downturn in the mortgage market. The Cleveland-based bank most recently posted a $333 million fourth-quarter loss, as its mortgage banking operations lost $445 million, swamping gains in retail banking and steady performance in commercial banking. “The review has no impact on National City’s day-to-day operations,” said National City chairman, president and CEO Peter E. Raskind. “We remain focused on providing our customers with the high quality products and personal service that have long differentiated us in the marketplace.” dealReporter suggested late last week that two bidders were in the mix to acquire National City — Wells Fargo and cross-town rival KeyCorp. Sources close to the negotiations confirmed Tuesday to HW that these two companies are in “advanced” negotiations with the bank, but that concerns over the residential mortgage portfolio are proving to be a sticking point. Beyond a possible outright sale, the bank has been reported to also be considering a sale of its asset management business and/or a sale of its stake in Visa, according to the dealReporter story. As the credit crunch gathered steam toward the back half of last year, National City Corp. — along with other major banks engaged in mortgage banking — has been relying heavily on advances from the Federal Home Loan Banks to fund its loans. Advances quadrupled from $1.39 billion in 2006 to $5.47 billion last year, according to filings with the Federal Deposit Insurance Corp. Disclosure: The author held no positions in NCC when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.

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