Financial Winners & Losers

Return to Article

Financial Winners & Losers: KeyCorp

The Associated Press

NEW YORK -- Shares of regional banks were mixed Tuesday, after the government introduced a number of new initiatives designed to help unfreeze the credit markets.

The Federal Reserve said it will buy $500 billion in mortgage-backed securities, or pools of mortgages that are bundled together and sold to investors. The government will also lend up to $200 billion to the holders of securities backed by various types of consumer loans, including credit card loans.

The programs represent the latest efforts by the government to help spur more normal lending among banks and to consumers. Financial institutions have been hesitant since the bankruptcy of Lehman Brothers in September to lend money for fear they won't be repaid.

Credit quality continued to weaken in housing-related portfolios during the third quarter, even for banks outside of the more troubled regions of the U.S., according to a report issued by Standard & Poor's Ratings Services on Tuesday.

Specifically, commercial banks that lend mainly in the South and the Midwest saw their already weakened credit quality deteriorate further in the quarter, S&P said. While reasonable lending opportunities appeared to exist in niche segments like small-to-midsize business lending, corporate lending opportunities remained scarce, the ratings service said.

As a result, S&P expects strong reserve building to continue at least through the first half of 2009.

Among the advancers in the sector were KeyCorp (KEY), which closed up 58 cents, or 7%, to $8.69 in afternoon trading, and Fifth Third Bancorp (FITB), which finished 45 cents higher, or 5.2%, to $9.13.

SunTrust Banks (STI) closed up $1.32, or 4.7%, to $29.63.

In a note to clients Tuesday, Fox Pitt Kelton analyst Albert Savastano maintained an outperform rating on PNC Financial Services (PNC), noting the potential for greater cost savings due to the pending acquisition of National City (NCC) Savastano also said the combined company will have below-average credit risk.

PNC closed up $3.62, or 7.5%, to $52.17.

Meanwhile, Moody's Investors Service said Monday that it may downgrade the debt ratings on Marshall & Ilsley (MI), and expressed concern over weakness in the regional bank's real estate portfolio.

Marshall & Ilsley shares finished lower 23 cents to $13.92 in afternoon trading.

Other decliners included Regions Financial (RF), which closed higher by 3 cents to $9.41, and Comerica (CMA), which closed up $1.07 to $20.27.