National City Corp., Ohio's top bank and subprime lender, could seal a deal in a manner of hours with a buyout firm and a handful of shareholders to add a much-needed $7 billion to its balance sheet, people with knowledge of the situation told the Journal, the FT, B’berg, et all. To which we had only one question: how does JP Morgan fit into all this? We were heartened to learn we did not ask it in vain.

National City Corp., Ohio's biggest bank and subprime lender, may get $6 billion to $7 billion from a group led by Corsair Capital LLC to bolster its balance sheet, said a person with knowledge of the situation.

The investors will pay $5 a share, about 40 percent less than National City's closing price on April 18, said the person, who didn't want to be identified before a possible announcement later today. The company also plans to slash the quarterly dividend to 1 cent a share from 21 cents, the second cut this year, the person said.

``Shareholders continue to get penalized,'' said Gerard Cassidy, a Portland, Maine-based analyst at RBC Capital Markets, who has a ``sector perform'' rating on National City. ``It's another major company going to the capital markets to enable them to survive in this incredibly deflationary environment.''

National City climbed 8 cents to $8.41 in German trading today. The bank, which lost 78 percent of market value in the past year, has been hurt by Ohio's housing slump. The state had the seventh-highest foreclosure rate in the U.S. last month, data compiled by research firm RealtyTrac Inc. show. Financial companies have disclosed more than $250 billion of writedowns and credit losses from the collapse of subprime mortgages.

Ignacio Jayanti, president of Corsair, didn't immediately respond to a call seeking comment. National City spokeswoman Kristen Baird Adams declined comment. Parts of the transaction were reported yesterday by the Financial Times.

New York-based Corsair, founded in 1993 by JPMorgan Chase & Co., will own 9.9 percent of National City after the capital raising and Corsair's vice chairman, Richard Thornburgh, will get a seat on National City's board, the person said.

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