The new CEO of New York Community Bancorp (NYCB), Joseph Otting, said that he is currently working on creating a new business plan for this financial institution.
Nowadays, the mentioned lender is in a difficult situation. The bank’s performance indicators show a significant drop. In the fourth quarter of last year, the financial institution recorded losses of $252 million. This is a significant contrast compared to the result for the same period in 2022 when the bank gained a profit of $ 172 million.
On Wednesday, March 6, the financial institution announced a capital raise of more than $1 billion and personnel changes. The bank concluded the deal for the mentioned amount with several investment companies, including Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital, and Reverence Capital Partners. In exchange for the financing provided, investors will receive a portion of the equity.
The cost of the bank’s shares began to show growth after the news about raising capital, but at the same time, high volatility was recorded. During the day, the securities of the financial institution rose in price by almost 30%. Over time, this dynamic returned to a more moderate trajectory. Before the information about raising capital was published, the share price of the financial institution fell by 42%.
On Thursday, the bank’s securities rose by 12%. The previous days were for a financial institution a period of a kind of radical instability between losses and profits. This trend has become evidence of uncertainty about the bank’s prospects.
The shares of the financial institution were under increased pressure after information about unexpected losses in the fourth quarter of last year was published, and there was a 70% reduction in dividends in January.
Joseph Otting, a former currency controller in the Donald Trump administration, was appointed CEO of NYCB on Wednesday. He and the non-executive chairman of the board of the financial institution, Alessandro DiNello, intend to present a new business plan at the end of April. This was announced by Joseph Otting during a telephone conversation with analysts on Thursday.
Recently, the bank has been making efforts to stop the rapid decline in the price of shares. Against the background of this trend, the market value of a financial institution has decreased by several billion dollars. The negative situation in which NYCB found itself has actualized concerns about the situation in the regional segment of the American banking sector. In this context, many recalled the collapse of Silicon Valley Bank and Signature Bank last year.
NYCB has promised to reduce its risks in the commercial real estate sector. In the fourth quarter of 2023, the financial institution made huge provisions for possible bad loans related to the mentioned sector. Empty office buildings in the post-coronavirus pandemic era and high borrowing costs have increased concerns about debt defaults.
Top managers on Thursday did not respond to questions about portfolios that NYCB could divest to reduce its presence in the commercial real estate sector and raise capital. Joseph Otting said that bidders outside the banking sector were interested in buying assets.
As we have reported earlier, Moody’s Downgrades New York Community Bancorp.
