National City says faces SEC probe

NEW YORK (Reuters) - National City Corp (NCC.N: Quote, Profile, Research, Stock Buzz), a U.S. Midwest regional bank struggling with mortgage losses, said on Friday the U.S. Securities and Exchange Commission has opened an informal investigation into the company.

In its quarterly report filed with the agency, the Cleveland-based bank said the SEC's Chicago regional office notified it of the probe on June 30.

It said the SEC requested documents concerning its loan underwriting, dividends and bank regulatory matters, as well as its 2006 sale of its First Franklin Financial Corp subprime mortgage unit to Merrill Lynch & Co (MER.N: Quote, Profile, Research, Stock Buzz).

National City said it intends to cooperate with the SEC, and that it does not know the scope or outcome of the probe.

Last month, National City reported a $1.76 billion second-quarter loss, its fourth straight quarterly loss.

Results were hurt by soaring mortgage and real estate construction loan losses, and a $1.08 billion write-down of goodwill for acquisitions.

Mounting real estate losses, including in Florida and Michigan, drove National City in April to raise $7 billion of dilutive capital from Corsair Capital LLC and other investors, and to slash its dividend twice in 2008.

Shares of National City closed on Friday up 10 cents at $5.12 on the New York Stock Exchange. They have fallen 69 percent this year.

National City filed its quarterly report with the SEC after U.S. markets closed.

(Reporting by Jonathan Stempel; Editing by Braden Reddall)