notverkauf bei subprime / new

National City sells First Franklin to Merrill for $1.3 billion

NEW YORK (MarketWatch) -- National City Corp on Tuesday said it reached a deal to sell First Franklin, its subprime mortgage business, to Merrill Lynch & Co for $1.3 billion.

The deal includes Merrill's purchase of affiliated businesses National City Home Loan Services and NationPoint. In a separate transaction, National City said it also expects to sell to Merrill $5.6 billion of First Franklin's originated mortgage loans.

Merrill said it expects the acquisition to be accretive to its net earnings by the end of 2007.

National City said the transactions will result in a one-time pre-tax gain of approximately $1 billion, or $1.00 per share after tax, expected to be realized in the fourth quarter upon closing, subject to regulatory approval.

"The sale will generate a significant amount of capital to redeploy for the benefit of National City shareholders and will allow us to further focus on our core banking, mortgage, and consumer lending businesses," said David Daberko, National City's chief executive in a statement. "All of these businesses are on track to produce good third quarter and second half results," he said.

Subprime mortgages, which are extended to homebuyers with less-than-perfect credit ratings, have become riskier as the housing market has begun falling faster than expected and as defaults have started rising

Speaking at a banking conference a few weeks ago, Daberko warned he had seen a marked increase in first-payment defaults on loans, while average balances in checking accounts were dropping and there were more and more overdrafts, with consumers "getting stretched big time now."

National City said it will continue to hold approximately $10 billion of First Franklin originated loans, "substantially all of which have some form of credit risk protection either through lender-paid mortgage insurance or a credit risk transfer agreement."

But it said management would continue to consider strategic options for the portfolio, including sale, securitization or ongoing retention.

"Overall credit trends in the third quarter, including recourse liabilities associated with sold loans, continue to be stable and in line with recent periods," Daberko said in the statement.
Merrill, meanwhile, sells mortgages to the credit market, so-called securitization, in the form of mortgage-backed securities.

"These leading mortgage origination and servicing franchises will add scale to our platform and create meaningful synergies with our securitization and trading operations," said Dow Kim, president of Merrill Lynch's Global Markets and Investment Banking Group in a statement.

Michael Blum, head of Merrill's Global Structured Finance & Investments group, said the acquisition of National City's Home Loan Services will allow the firm to boost its risk management of mortgage products.

update:

Gerard Cassidy, an analyst with RBC Capital Markets, said National City investors may be disappointed that the company didn't sell the entire $15.6 billion loan portfolio. He said Merrill apparently shied away from the full subprime portfolio due to concerns about credit risks. A Merrill spokesman declined to comment.

http://immobilienblasen.blogspot.com/2006/08/new-century-financial-new.html.

"Merrill obviously didn't want to take that risk of the additional $10 billion," Cassidy said. "The deal is less satisfying to investors than if they were able to unload everything. There's still a chunk of exposure that they're left to deal with in coming months."


das update erklärt einiges. dachte schon ich verstehe die welt nicht mehr. new hat es nicht geschaft die riskanten kredite von über 10 billionen $ zu vertickern. ml hat sich die sahnestücke rausgepickt und hat nun ne unbelastete vertriebsplattform in sachen subprime. verstehe trotzdem nicht warum die ausgerechnet jetzt in deeses segment wollen.



jan-martin