The business stories that matter, by Fortune's Colin Barr
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January 2, 2008, 12:10 pm

Nasty turn at National City

National City (NCC) keeps trying to dig its way out of the mortgage mess. The Cleveland-based bank announced another round of layoffs Wednesday and said it will cut its quarterly dividend in half. National City also said it will raise capital for the second time in six months as the bank seeks to build up its cushion for rising loan losses. Including Wednesday’s announced plan to cut 900 mortgage unit jobs, National City has reduced its workforce by 3,400 positions since Sept. 30 - an 11 percent cut, going by CNNMoney.com figures.

“Getting from where we started earlier this year to where we need to be by year end is not pleasant or fun, to be sure,” CEO Peter Raskind noted on a conference call back in October. That’s an understatement, but at least Raskind seems to be living in the same world as the rest of us.

The same couldn’t be said for his predecessor David Daberko, who told Reuters in April that “we would expect to be in the black in future quarters” in mortgage banking. Instead, National City’s mortgage operations have been losing money, leading to the hefty job cuts. Daberko was right in one respect about mortgage banking, though. While the business itself isn’t in the black, the outlook could hardly be darker.

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Colin Barr covers business and finance for Fortune.com. Previously he was an editor at TheStreet.com and author of the weekly Five Dumbest Things on Wall Street column, and an editor at Dow Jones Newswires.
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