Moody's says may cut National City ratings

NEW YORK, Sept 29 (Reuters) - Moody's Investors Service on Monday placed the ratings of National City Corp NCC.N on review for a possible downgrade on concerns about the bank's exposure to real estate.

Moody's rates the bank's senior debt at A3, three notches above speculative, or 'junk' grade.

The review will focus on National City's exposure to "significant real estate-related credit costs," analysts said in a note.

"Moody's notes that the magnitude of these credit costs relative to the firm's earnings from its core banking franchise make the timing of its return to profitability uncertain," it said.

Earnings worry has hurt investor confidence and could undermine the bank's core franchise, said the agency.

National City raised capital earlier in 2008 and that has given it a cushion against any potential losses. The bank and the holding company continue to have strong liquidity positions and are unlikely to require fresh capital in the near term, said Moody's.

National City shares lost 61 percent of their value on Monday, caught up in a broad rout of financial stocks sparked by fears of further failures.

The selling was exacerbated by the rejection of the $700 bailout plan for the sector by the U.S. House of Representatives, which raised fresh worries about global crisis in credit markets.

National City said in a press release that it was better capitalized than Washington Mutual and Wachovia and has less exposure to troubled mortgage loans. For more, see [ID: nN29378911]. (Reporting by Ciara Linnane; Editing by Dan Grebler)