NatCity Cancellation Irritates Loan Bidders

Washington-In late December, National City Corp. pulled a $2.1 billion portfolio of troubled mortgages off the market after several investors had spent thousands of dollars conducting due diligence and then proffered bids, investment banking sources said last week.

At press time, NatCity - which is now the property of PNC Bank of Pittsburgh - had not commented on the matter. Three different investment bankers confirmed that a deal of that size was out in the market place from the bank. "There were roughly 20 pools," said one investment banker who bid on the loans. "I spent weeks evaluating it. Then everyone bid."

The banker described the portfolio as "distressed loans" and said they were mostly residential in nature. "Maybe they were just trying to get a mark on the loans and had no intention of selling," he said.

A mark refers to a price. On occasion financial institutions will offer assets for sale - without having the intention to sell - to establish a price or "mark" on the loans.

Another investor said he looked at the pool after previously having purchased two small loans pools from the Cleveland-based bank.

In October, PNC agreed to buy the struggling NatCity for $5.6 billion and then received $7.7 billion through the government's TARP program. One source said he does not understand why NatCity took the auction so far and then pulled it, but suggested it might have something to do with the TARP money PNC received.

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