NEW YORK — Shares of New York Community Bancorp fell again Wednesday, this time 11%, when its credit rating was downgraded to “junk.”
Investors fear that the regional lender will face the same fate as Silicon Valley Bank last year and go bankrupt in the coming days or weeks.
NYCB shares have plummeted since a week ago, when the bank reported large losses on commercial real estate loans and indicated it was having trouble digesting its acquisition of Signature Bank, completed last year.
Shares have fallen 40% since the balance sheet was issued.
For many, the banking crisis had supposedly ended, but some conservative and independent analysts warned that this was not the reality. This is now confirmed by the situation of NYCB and other regional banks in the US that have chosen to remain silent, but are currently going through an unfavorable situation.
NYCB bought the majority of Signature Bank’s assets last year, when it fell into bankruptcy in mid-March, on the heels of Silicon Valley Bank.
The NYCB rated “junk”
The purchase of Signature made NYCB a much larger bank in terms of assets, which by law subjected it to greater pressure from regulators. The bank had to cut its dividend and raise its capital and liquidity ratios to meet the requirements of federal regulations.
But one of the main causes of its fall is the collapse of sales in the real estate sector for two consecutive years and the impact of the banking crisis on investors, in addition to the debt it had to assume from the Signature bank.
Concerns about impending bankruptcy rise across NYCB’s commercial real estate portfolio.
The bank reported a loss of $252 million in the fourth quarter, including a provision for credit losses of $552 million, largely linked to the real estate sector.
Shares fell 22% on Tuesday. After the market closed, credit rating agency Moody’s downgraded the credit rating to “junk.”
The situation appeared to improve in pre-opening operations on Wednesday, when the bank reported that 72% of its deposits are insured and it has liquidity of $37.3 billion, which exceeds uninsured deposits. But shares resumed their decline after the open.
“Despite the downgrade from Moody’s, our deposit ratings from Moody’s, Fitch and DBRS remain investment grade,” said the bank’s CEO, Thomas Cangemi. “Moody’s downgrade is not expected to have a material impact on our contractual provisions.”
What Joe Biden’s government does not say is that the banking crisis in the US did not end after it began in 2023, as analysts have warned. Nor is any mortgage crisis named when property sales have been falling almost entirely for two consecutive years with the corresponding impact on the construction sector.
The NYCB has a large part of its client base in real estate investments. That is why the alarms are ringing, after a week of signs of low confidence on Wall Street.
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Source: With information from AP.
