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Nat City May Shed 'Problem Assets'

The Cleveland-based regional bank is still stinging from subprime loans on its books, even after a capital raise.

National City


shares shrugged off comments by the regional bank's CEO, who said it was considering shedding "problem assets" tied to the housing slump, reports say.

CEO Peter Raskind, speaking at a

Lehman Brothers


conference in London earlier Wednesday, said Nat City could sell mortgages or put them in a separate entity, according to



"We are involved in some fairly intense discussions and analysis to try to understand what the alternatives may be,'' he said in the report.

The comments come even as the Cleveland-based bank was forced to

raise $7 billion

in capital last month from a consortium of investors led by private-equity firm Corsair Capital.

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were among other banks to raise money after poor first quarters. Nat City was rumored to be looking to sell itself, before the capital injection.

Nat City has been hobbled by the housing and mortgage downturn after getting into the business of higher-return, yet risky subprime mortgages as well as its decision to expand into Florida.

The Midwest banking company was able to sell its subprime lender, First Franklin, to

Merrill Lynch


for a tidy sum of some $1 billion in 2006 -- just as the housing bubble was beginning to deteriorate. Merrill said in March that it was shuttering the subprime lender as the New York-based investment bank reels from losses related to securities backed by mortgages.

But Nat City still has

subprime loans

from First Franklin on its balance sheet. And despite its efforts to run off the subprime portfolio, it still had $5.3 billion subprime loans left at the end of the first quarter, according to



"If we can discover ways to accelerate the disposition or even segment these portfolios more quickly by using some of the new capital, we have a real interest in doing so," Raskind said, according to


. "The market for disposing of distressed consumer real-estate assets, at least to date, has been punitive at best."

Nat City's stock was down fractionally in recent trading Wednesday.