KeyCorp craters after dividend cut

This morning, I posted a blog entry regarding KeyCorp’s wise decision to cut its dividend and to raise capital. They paid the price in the market today, sinking to a 17-year low below $12.00 a share and down 24% on the day.

Shares of KeyCorp sank to the lowest level in almost 17 years, following news that the Cleveland-based financial services company will halve its dividend and raise about $1.5 billion to shore up its balance sheet.

The stock dropped $3.73, or 24 percent, to $11.98, and bottomed at $11.64 – its lowest point since July 1991.

In order to save about $200 million, annual dividends will be cut by 50 percent to 75 cents per share, starting in the third quarter.
-AP via Forbes, 12 Jun 2008

Market participants seem to have belatedly recognized the risk inherent in the balance sheets of U.S. regional banks due to the downturn in construction and commercial real estate loans. KeyCorp has lost nearly 35% in the last five trading sessions.

See: Credit Crisis Timeline for a full list of writedowns and capital raising by institution and a timeline of the credit crunch.

See also: Other posts under the label ‘regional banks.’