In the banking world, the worst time to raise money is when you really need it. Ironically, this is the predicament for many banks - especially those that binged on subprime mortgage.

One of the latest victims is Fifth Third Bancorp (NASDAQ: FITB), which traces its roots back to 1858 (the company is the result of the merger of Third National Bank and yes, the Fifth National Bank).

Well, Fifth Third announced Wednesday that it plans to raise a minimum of $2 billion, which will include convertible preferred shares as well as the sale of non-core assets (for example, there is an electronic processing business that is likely to fetch a good valuation). There's more: the company says it will reduce the dividend by 66% (I guess it's better than nothing).

Basically, Fifth Third has heavy concentration in Florida and Michigan, both undergoing economic stress (whether from autos, real estate or construction). There are also some problems with leveraged leases that recently also suffered an adverse court ruling.

Unfortunately, in the current environment, it's not going to be easy to raise new capital. That is, the terms are likely to be harsh.

And investors are already anticipating this. In Wednesday's trading, Fifth Third's shares plunged 27% to $9.26.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

Fifth Third equals zero for investors originally appeared on BloggingStocks on Thu, 19 Jun 2008 09:47:00 EST. Please see our terms for use of feeds.

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Closing Bell: DJIA barely holds 12,000... chips dip originally appeared on BloggingStocks on Wed, 18 Jun 2008 16:14:00 EST. Please see our terms for use of feeds.

Fifth Third Bancorp (NASDAQ: FTIB) is recently trading down $1.73 to $11 in pre-open trading.

FITB announced the planned issuance of $1 billion in tier 1 capital in the form of convertible preferred shares. FITB declared a Q2 dividend of 15 cents, a reduction from the previous 44 cents per share quarterly level. FITB says the anticipated sales of non-core business would supplement common equity by an estimated additional $1 billion.

FITB overall option implied volatility of 86 is above its 26-week average of 47 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Option Update: Fifth Third Bancorp volatility up into capital raise originally appeared on BloggingStocks on Wed, 18 Jun 2008 08:29:00 EST. Please see our terms for use of feeds.

National City (NYSE: NCC) closed at $9.79 Thursday.

The WSJ reported Fith Third Bancorp (NYSE: FITB) is considering a bid to purchase NCC according to people familiar with the situation.

NCC announced on April 1 that its Board of Directors are reviewing a range of strategic alternatives for the company.

FITB has $110 billion in assets. NCC has $150 billion in assets.

NCC May option implied volatility of 110 is above its 26-week average of 58 according to Track Data, suggesting larger price fluctuations.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Option Update: National City volatility at 110 as board reviews strategic alternatives originally appeared on BloggingStocks on Fri, 04 Apr 2008 09:02:00 EST. Please see our terms for use of feeds.