KeyCorp Slashes Dividend 66%, To See $248 Million Annual Savings
The move, which will save almost $248 million a year, comes on top of the bank's decision last month to sell the U.S. government $2.5 billion in preferred stock and warrants as part of the Treasury Department's program to infuse capital into healthy financial institutions.
The Cleveland bank, which wasn't a big subprime player but expanded aggressively into hot markets that are now deeply troubled, reduced its payment to 6.25 cents, payable Dec. 15.
"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 L. Meyer III said. "While difficult, our board and senior management team believe this decision is prudent and proactive in the current environment."
In unveiling the capital purchase program, the Treasury Department required nine of the nation's largest financial-services companies to sell $125 billion in preferred stock to the government and said the same amount could be bought from other firms on a voluntary basis.
If KeyCorp's $2.5 billion had been in hand as of Sept. 30, it said its Tier 1 ratio level would have been about 10.8%, not the 8.5% recorded.
Last month, the bank swung to a third-quarter loss as it added to loan loss reserves amid deteriorating credit quality.
Shares rose 1.3% to $7 in after-hours trading but are off 71% this year.
-By Lauren Pollock, Dow Jones Newswires; 201-938-5964; lauren.pollock@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/al?rnd=ZeJWYD76SSUIrDh7xN%2BBbg%3D%3D. You can use this link on the day this article is published and the following day.
Corrected November 21, 2008 10:56 ET (15:56 GMT)
(END) Dow Jones Newswires
November 20, 2008 17:43 ET (22:43 GMT)
Publié le 21 novembre 2008 Copyright © 2008 Dowjones
Partager sur:
