US Markets
Wednesday, February 7th, 2024 3:51 pm EDT
Key Points
- NYCB promoted its chairman, Alessandro DiNello, to executive chairman in a bid to stabilize the company’s operations following a two-notch credit rating downgrade to junk status by Moody’s Investors Service.
- Shares of NYCB plummeted by as much as 13% on Wednesday, following a 20% decline the previous day, as the regional bank grappled with significant challenges, including a surprise fourth-quarter loss, mounting losses on commercial real estate, and a 71% dividend cut.
- Moody’s downgraded NYCB’s long-term ratings to Ba2 from Baa3, citing concerns about turnover in the bank’s risk management leadership and highlighting multi-faceted financial, risk-management, and governance challenges, which remain under review for further downgrade.
New York Community Bank (NYCB) faced a turbulent period as Moody’s Investors Service downgraded its credit ratings two notches to junk status, prompting a sharp decline in shares, which fell by as much as 13% on Wednesday following a 20% drop the previous day. In response to the mounting challenges, NYCB promoted Alessandro DiNello from nonexecutive chairman to executive chairman to collaborate with CEO Thomas Cangemi in improving all aspects of the bank’s operations. The bank’s troubles escalated after it reported a surprise fourth-quarter loss, coupled with mounting losses on commercial real estate and a significant dividend cut. Moody’s cited various financial, risk-management, and governance challenges at NYCB, particularly highlighting concerns about turnover in risk management leadership. Despite the turmoil, NYCB sought to reassure investors by affirming that 72% of total deposits were either insured or collateralized, and it maintained ample liquidity to cover uninsured deposits. During a call with investors, DiNello acknowledged the severity of the situation but emphasized the resilience of NYCB, noting minimal deposit outflows from retail branches despite the challenges. The bank’s search for key leadership positions, including a chief risk officer and chief audit executive, underscored efforts to stabilize operations amidst heightened scrutiny and market volatility.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/07/nycb-moodys-downgrades-banks-credit-rating-to-junk-shares-tumble.html
