Fitch downgrades NYCB to junk status, Moody’s downgrades further

(Bloomberg) — New York Community Bank’s credit rating was downgraded to junk status by Fitch Ratings and Moody’s Investors Service further downgraded its rating, a day after the commercial real estate lender said it was changing the way it tracks loan risk. A “major flaw” was discovered.

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Fitch lowered the bank’s long-term issuer default rating to BB+, one notch below investment grade, from BBB-, according to a statement on Friday. Moody’s downgraded the bank to junk status last month and downgraded its issuance workforce rating to B3 from Ba2.

Fitch said the weaknesses identified by the bank “have prompted New York Commercial Bank to reconsider its controls on provision adequacy, particularly in its concentrated investments in commercial real estate”.

Read more: NYCB points to weaknesses in lending regulations, names new CEO

The bank’s announcement on Thursday that it needed to step up loan reviews has reignited investor concerns about the company’s potential exposure to distressed commercial property owners, including New York apartment owners. The stock plunged 26% on Friday, although the company said it did not expect that to happen. Control deficiencies will result in changes to its credit loss provisions.

“Moody’s believes that NYCB may have to further increase its credit loss provisions over the next two years due to the credit risk associated with its office building loans,” the credit rating agency said in a statement. The credit rating agency also noted that “its multi-family There is a huge repricing risk for home loans.”

NYCB shares closed this week at $3.55, down 65% this year.

Chief Executive Alessandro DiNello, who took over this week, said in a statement early Friday: “The company has strong liquidity and a solid deposit base. I believe we will Executing our turnaround plan to enhance shareholder value.”

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