NYCB jitters about fleeing depositors mount amid another Moody's ratings downgrade

March 05, 2024 09:28 AM AEDT | By Investing
 NYCB jitters about fleeing depositors mount amid another Moody's ratings downgrade

Investing.com -- New York Community Bancorp 's wild ride lower continued Monday as concerns about rising funding costs and depositors fleeing the regional bank mount after major credit ratings agency Moody's (NYSE:MCO) cut its ratings on the bank's ability to pay back its creditors for the second time in a month.

New York Community Bancorp Inc (NYSE:NYCB) closed 23% lower on Monday.

Moodys' investors Services slashed NYCB's long-term credit rating by four notches to B3 from Ba2, further below investment grade, warning that the regional bank may have to increase in credit loss provisions, setting more money aside to cover a potential default on loans over the next two years.

Fellow credit rating agency Fitch Ratings downgraded NYCB's credit rating to junk last week and its Flagstar Bank subsidiary's rating to B from BBB-, which is the lowest investment grade rating and above junk.

The move comes after the beleaguered lender recently flagged "material weaknesses" in its internal controls related to loan review.

Other credit rating agencies, however, don't expect to deliver further credit rating downgrades following the regional bank's steps to shore-up risk controls and operations including the appointment of key personnel with large bank experience.

"Further credit rating actions are not anticipated at this time. However additional missteps or pressure on the franchise would result in a further credit rating downgrade," Morningstar DBRS, the fourth largest credit ratings agency, said in a recent note. The credit rating agency previously downgrade NYCB to BBB from BBB (high) in February.

"The new hires have large bank experience which should help the company navigate more complex issues as well as greater regulatory requirements that come with being a banking company with over $100 billion in asset," Morningstar said.

A spike in costs to retain depositors or material increase in loan loss provisions, however, could force another downgrade, Morningstar said. The credit ratings would be downgraded if NYCB is "unable to maintain deposit funding at a reasonable cost, or reports another outsized loan loss provision."

This article first appeared in Investing.com


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.


AU_advertise

Advertise your brand on Kalkine Media

Sponsored Articles


Investing Ideas

Previous Next
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.