UDPATE 1-KeyCorp cuts dividend again, despite Oct assurance
NEW YORK, Nov 20 (Reuters) - KeyCorp (KEY.N), a large U.S. Midwest regional bank, lowered its common stock dividend on Thursday for the second time this year and less than a month after its chief executive said he was "very comfortable" with the higher payout.
The Cleveland-based lender cut its quarterly dividend by 67 percent to 6.25 cents per share from 18.75 cents, a move that could save $248 million a year based on roughly 495 million shares outstanding.
"The modification of our common dividend will help further strengthen Key's capital in light of the current uncertainty facing the U.S. and global economy," Chief Executive Henry Meyer said in a statement. "This decision is prudent and proactive in the current environment."
In June, KeyCorp reduced the dividend to 18.75 cents from 37.5 cents. The total year-to-date reduction is 83 percent.
The bank had raised its dividend in 43 straight years.
KeyCorp lowered the payout again despite recently receiving $2.5 billion from the federal government's $700 billion Troubled Asset Relief Program (TARP), increasing its Tier-1 capital level well about regulatory minimums. The level measures a bank's ability to cover losses.
On Oct. 21, Meyer said on a conference call that KeyCorp was "very comfortable" with the dividend of 18.75 cents, citing TARP and the reversal of some charges related to an U.S. Internal Revenue Service tax case. The bank has about $101 billion of assets.
KeyCorp shares closed down 79 cents, or 10.3 percent, at $6.91, a slightly larger decline than the 9.6 percent drop in the KBW Bank Index .BKX, which includes KeyCorp. The bank's shares have fallen 70.5 percent this year. (Reporting by Jonathan Stempel; editing by Jeffrey Benkoe)
