National City in talks with Fifth Third-sources

By Paritosh Bansal

NEW YORK (Reuters) - National City Corp (NCC.N: Quote, Profile, Research), the ninth-largest U.S. bank, is looking to sell itself and is in talks with more than one potential buyer, including Fifth Third Bancorp (FITB.O: Quote, Profile, Research), people briefed on the matter said.

The talks are preliminary, the sources said.

Fifth Third spokeswoman Debra DeCourcy and National City spokeswoman Kristen Baird Adams declined to comment on Thursday.

Media reports have said for weeks that Cleveland-based National City was looking to be acquired under the strain of mounting mortgage losses, exposure to the hard-hit Ohio and Michigan real estate markets, and a badly timed foray into Florida.

A sale to a bank such as Fifth Third, which is based in Cincinnati, would help a combined company cut costs in a difficult environment, said Terry McEvoy, an analyst at Oppenheimer & Co.

"To cut expenses would give the combined company an ability the offset some of the pressures that the sector is facing today," McEvoy said.

The housing downturn has forced the bank to boost credit reserves and write down bad loans. National City lost $333 million in the fourth quarter.

In January, the bank sold more than $2 billion of securities, including $1.4 billion of convertible notes.