Latest Round of Credit Downgrades Causes NYCB to Extend Rout
2 min read
New York Community Bancorp Faces Second Day of Share Price Tumble
New York Community Bancorp (NYCB) is facing a financial downturn as its share prices continue to plummet for the second consecutive day. The bank experienced a sharp decline in its stock value after receiving rating downgrades from both Fitch Ratings and Moody’s Investors Service.
Fitch Ratings lowered NYCB’s assessment to non-investment grade, while Moody’s Investors Service went even further by downgrading it to a junk rating. As a result, the bank’s stock fell by 23%, reaching its lowest level since 1996, following a 26% plunge on the previous day.
The CEO of NYCB was replaced after the bank disclosed “material weaknesses” in tracking loan risks. This news has caused concern among investors and analysts, with Wedbush Securities Inc. analyst, David Chiaverini, warning that the downgrades could lead to higher borrowing costs for the bank.
Despite being seen as a relative winner among regional banks in 2023, NYCB has suffered a significant loss in value this year, with its stock losing more than two-thirds of its value. Moody’s also downgraded the long-term deposit rating on NYCB’s lead bank, Flagstar Bank.
NYCB has remained tight-lipped about the impact of the rating cut and did not respond to requests for comment. While the KBW Bank Index saw a modest gain of 1.8% on Monday, a regional bank gauge, which includes NYCB, slipped by 0.6%.
Investors and stakeholders are closely monitoring NYCB’s performance in the wake of these rating downgrades and leadership changes, as the bank faces increasing challenges in maintaining its financial stability and market position.
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