National City Corp. is raising US$7 billion of additional equity capital to solidify the company’s financial foundation.

Bank of Nova Scotia was rumoured to be interested in taking a stake in the Cleveland, Ohio-based bank. Today, National City said that it will be receiving US$985 million of private equity capital from Corsair Capital, and US$6.015 billion from other investors, including several of National City’s largest current institutional stockholders.

Separately, National City also released its first quarter 2008 results, reporting a net loss of US$171 million, compared to a net loss of US$333 million in the fourth quarter of 2007.

“This strategic raising of equity capital provides National City with the financial flexibility to continue investing in and growing our core businesses, which are delivering solid results, while addressing the asset quality challenges posed by the disruptions in the credit and housing markets,” said National City chairman, president and CEO, Peter Raskind.

“Clearly, the U.S. housing and mortgage environment deteriorated significantly over the course of the first quarter. As a consequence, we have revised future loss expectations and significantly increased reserves across several portfolios, in particular the liquidating portfolios of nonprime mortgage and broker-sourced home equity loans,” Raskind said.