In a realignment of its consumer finance operations, National City Corp. of Cleveland said Friday that it will close 69 retail loan stores, get out of automobile leasing, and consolidate its wholesale mortgage origination business into a subsidiary.

The banking company said it expects to record pretax fourth-quarter charges of between $43 million and $46 million to cover severance and asset writedowns, including lease residual values and goodwill.

National City plans to cut 200 jobs, though executives said they hope “some proportion” of the affected staff can find positions elsewhere in the company.

Peter E. Raskind, executive vice president and the head of consumer finance, said that the company has been looking at ways to boost its financial performance by exiting or scaling back from marginally profitable business lines.

“In each of the cases, these three businesses simply did not meet our objectives with respect to profitable growth in the foreseeable future,” he said. “This is really just an attempt to take advantage of our strengths within the organization.”

The reorganization is Mr. Raskind’s first major move as head of consumer finance, a job he took in September after 17 years with U.S. Bancorp of Minneapolis. Before joining National City he had been in charge of improving customer service in U.S. Bancorp’s branch and telephone banking operations.

Though National City is jettisoning its auto leasing business, it will retain its dealer finance operation, which lends to dealers of automobiles, boats, RVs, and manufactured housing.

The company said it remains committed to originating wholesale subprime mortgage loans through correspondent mortgage bankers and brokers.

But last year it found itself with two subsidiaries — Altegra Credit Co., which it formed, and First Franklin Financial Co. of San Jose, Calif., which it bought — that were originating wholesale nonconforming mortgages in essentially the same way. Under the realignment, First Franklin will originate loans and Altegra will service them.

“Generally speaking our nonprime mortgage business has been quite good,” said Mr. Raskind. “But these changes will help us gain focus, both on the origination side at First Franklin and the servicing side at Altegra. Those two units will have a very clear point of focus, and that leads to better business results.”

National City’s consumer finance business will be made up of five business lines. Three of them — education finance, national home equity, and credit cards — are not affected by Friday’s announcement.

Analysts said they were pleased that National City is instilling more financial discipline.

“What they’re doing is taking some businesses that were marginally profitable at best — perhaps even marginally unprofitable — and getting rid of them,” said Kenneth Puglisi, an analyst at Sandler O’Neill & Partners. “To the extent that you can free up capital to put it where it’s going to produce a better return and get rid of staff in areas that aren’t contributing to the bottom line, that always makes more sense.”

The retail loan branches to be closed, called Loan Zone stores, are located in 20 states. Mr. Raskind said the stores, which are operated by Altegra, are basically consumer lending outlets, like those of a finance company. “We did not feel that we had the scale to be competitive on a long-term basis,” he said.

Though National City is exiting the automobile leasing business, it will retain and continue servicing its $1.8 billion portfolio until it runs off, which observers said should take place over the next two years.

Observers said the changes are essentially trimming deadwood, and while not monumental in scope, they represent a positive step for the company.

“This is really just further rationalization of their businesses, but the rationalization is a positive,” said Susan Roth, an analyst with Credit Suisse First Boston. “The earnings impact is going to be pretty nominal, given that the businesses were not profitable or not terribly profitable.”

The only residual risk seems to come from the auto lease business, on which the company took a writedown in the second quarter and may take another soon, Ms. Roth said. Several other banking companies, including Bank One Corp. in Chicago, have had to contend with auto lease portfolio writedowns in recent quarters.

“This is positive streamlining,” said one observer who asked not to be identified. “I don’t see this as being a major departure or exit from their major business lines. I see it as fine tuning.”


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