Key Bank Plunges Nearly 30% as Wall Street Panics

As fear gripped Wall Street traders and the Dow Jones plummeted to new lows, shares of Cleveland-based Key Bank Corp. (NYSE:KEY) plunged, losing nearly 30% of their value on Thursday. Key closed the day at 6.42, -2.58 (-28.67%).

Much of the concern for Key Bank surrounds another Cleveland financial institution, National City Corp. (NYSE:NCC), who is reportedly looking for a buyer. Like Key, National City also experienced a drop Thursday, although not nearly as drastic (2.15, -0.08 or -3.59%).

Although Key Bank contends that they are in a better financial position than National City, with less entanglement in residential real estate and cleaner balance sheets, investors are simply looking for the next bank to fail. And one bank that comes to mind is Key Bank.

There is also concern right now that Key will have to return to the equity markets for a quick cash infusion, which is a concern for investors considering that Bank of America (NYSE:BAC) themselves had trouble raising equity and bodes poorly for other banks. Key already tapped into the equity markets back in June to raise $1.5 billion in capital after an unfavorable ruling related to a tax dispute that left them with around a $1.2 billion accounting charge to earnings.

Regional banks around the nation took a hard hit on Thursday, especially those lcoated in the Midwest and states like Nevada and Florida where the housing markets have been hit especially bad.