The latest move by a regional bank comes from KeyCorp, based in Cleveland. In order to preserve capital ahead of the impending troubles headed for the regionals, KeyCorp has taken the prudent step of both raising capital and cutting its dividend.
KeyCorp on Thursday said it would raise about $1.5 billion in new equity and slash its dividend to offset a planned second-quarter charge and a difficult economy.
The Cleveland-based bank also said it would cut its dividend by 50% to an annualized payout of 75 cents a share, beginning with the third quarter. The company said the dividend reduction would save it $200 million in capital annually.
–MarketWatch, 12 Jun 2008
It should come as no surprise, but this move demonstrates that U.S. bank dividends are not safe. Many more bank stocks will be forced to cut the dividend to preserve capital.
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Dividend Cutting and Capital Raising Efforts Continue, Mish’s Global Economic Trend Analysis
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.’