Nat'l City Bank under MOU

C-4 Joined: 08 Nov 2007 Posts: 1290

NCB is under a memorandum of understanding from the OCC. MOU's are supposed to be very confidential and only top officers of a bank and the regulatory body that oversees them are supposed to know. However it appears that someone has leaked this info to the WSJ which printed it and it has now been picked up by other news outlets.

This is pretty severe regulatory action and it's basically the most dramatic "private" position the regulators will impose on a bank. An MOU pretty much puts your regulators in your bank as your partner in banking, lol. It also restricts a banks autonomy and ability to make decisions without approval. They can be quite a pain. The next step (if there were to be one) would be a written agreement, which is public, or a c&d.

Obviously the contents of the mou are not public so what the regulators are working with NCB on in terms of their tier 1 capital, loan loss reserves, balance sheet etc. is unkown, but you can just imagine.

http://www.reuters.com/article.....6820080606

Nitroglycerin Joined: 24 Jan 2008 Posts: 755 Location: CA

I saw that in the NYT. I'm wondering now if this is one of the companies that Wells is looking at?

Here's another gem of a bank, but much smaller.
http://www.federalreserve.gov/.....0603a1.pdf

Posted: Fri Jun 06, 2008 7:32 pm

Don't wanna move this - can you mirror this topic and your posts over on the Bank-Implode forum? http://implode-explode.com/forum/viewforum.php?f=9

Wrecking crew Joined: 16 Mar 2007 Posts: 1685

Next comes the "Consent Decree", then the "Cease and Desist Order", and finally, the "Notice of Closure."

Having gone thru this in an earlier life, the idea that these are "confidential" is a joke. The high-ranking regulators and the top officers at the institution in question all have administrative assistants, and all of them talk when they aren't supposed to.

Once the media gets a hold of the story, ala Continental Illinois in 1984, chances are its soon to be over.

Fight On!!

Posted: Mon Jun 09, 2008 2:54 pm

An institution operating under a MOU with regulators can indeed be a serious situation. It is the contents of the MOU that are of importance, as many have operated under MOU's for various periods of time. I am aware of a bank that operated under a MOU for years and survived.

In the case of Nat City, I have no inside info on the details yet I suspect it is not a signal that good days are on the immediate horizon. I expect to see news leaks regarding other banks entering into MOU's with the OCC as well. Any company that issues a surety bond to an institution that enters a MOU with a regulator is notified of the action and this has been a source of leaks in the past. Perhaps this is the source in this case.

Flash in the pan Joined: 09 Feb 2007 Posts: 82

Their stock is down to $4.61/share as I write this. How low can it go before their market cap (or lack thereof) causes someone to buy them?

C-4 Joined: 08 Nov 2007 Posts: 1290

Mort Gidge wrote:

Their stock is down to $4.61/share as I write this. How low can it go before their market cap (or lack thereof) causes someone to buy them?

perhaps the person/entity that leaked the mou could answer that question. Laughing

This really sux for employees because NCB 401k match was with their own stock. Those 401k's must be getting hammered.

C-4 Joined: 10 Dec 2007 Posts: 1454 Location: Dallas

Do you guys that know more about regulators than I think it is a coincidence that this is happening right as Fortes is getting started up?

If you did not know, Fortes bought the National City wholesale infrastucture, has opened in San Siego and several other locals this month.

Posted: Tue Jun 10, 2008 4:55 pm

The previous sale of assets is most likely unrelated to the MOU. I suspect that capital ratios, loan loss reserves, and the recent surge in non-performing assets are the main components of this MOU with the OCC. It is safe to say they have issues.

They should really have mentioned in the article that a Memorandum of Understanding is nothing more than the bank agreeing to address a certain issue(s).

Common shares were diluted drastically after the private equity infusion from a group of investors led by Corsair. It would be interesting to know the exit strategy for the private equity investors since they do not generally get involved without such a strategy that at least made sense to them at the time. At the reported cost of $5.00 per share (approx 7 Bln total) puts them under water presently.

Posted: Thu Jun 12, 2008 2:36 pm

From the CEO Peter Raskind, the MOU involves “Capital management, risk management, asset quality and liquidity management which have already been publicly disclosed and discussed, including in our most recent 10-Q filing”.