On Tuesday, Cleveland-based KeyCorp, a large U.S. Midwest regional bank, said a shortage of liquidity in volatile credit markets could result in a first-quarter charge of $65 million, or 16 cents per share, tied to a portfolio comprised mainly of commercial real estate mortgage loans.
NEW YORK (Reuters) - Shares of KeyCorp <KEY.N> fell as much as 7 percent on Wednesday after an RBC Capital Markets analyst downgraded the stock to "underperform" from "sector perform," citing expected write-downs tied to residential construction loans and commercial real estate.
On Tuesday, Cleveland-based KeyCorp, a large U.S. Midwest regional bank, said a shortage of liquidity in volatile credit markets could result in a first-quarter charge of $65 million, or 16 cents per share, tied to a portfolio comprised mainly of commercial real estate mortgage loans.
The RBC analyst, Gerard Cassidy, wrote that KeyCorp is aggressively attacking problems causing asset values to fall. He nevertheless said the bank faces "credit market quicksand" and that both it and rivals will likely face further write-downs throughout 2008.
"Credit deterioration will be an issue the company will combat over the next 18 months due to its geographic presence in the Midwest and its exposure to the residential construction loan and commercial real estate markets," Cassidy wrote.
!ADVERTISEMENT!He cut his profit forecast for KeyCorp to $1.75 per share from $1.80 for 2008, and to $2.10 from $2.15 for 2009. His price target for the shares is $18.00.
KeyCorp shares were down 94 cents, or 4 percent, to $22.76 in morning trading on the New York Stock Exchange after earlier falling to $22.03.
(Reporting by Jonathan Stempel; Editing by John Wallace)
