Embattled lender New York Community Bancorp (NYCB) has secured more than $1 billion in funding in a bid to boost its balance sheet.
The equity investment, subject to regulatory approvals, comes from Liberty Strategic Capital, Hudson Bay Capital, Reverence Capital Partners, Citadel Global Equities, other institutional investors and members of the bank’s management. Of that, Liberty is expected to invest $450 million, Hudson Bay will invest $250 million, and Reverence is to invest $200 million.
As part of the transaction, NYCB will also add four new directors to its board, including former Treasury Secretary Steven Mnuchin, Joseph Otting, former Comptroller of the Currency, Allen Puwalski from Hudson Bay, and Milton Berlinski, managing partner of Reverence Capital. Additionally, Otting will become the CEO, while Alessandro DiNello will assume the role of non-executive chairman.
“In evaluating this investment, we were mindful of the bank’s credit risk profile,” Mnuchin said. “With the over $1 billion of capital invested in the bank, we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCB’s large bank peers.”
Commenting on the strategic investment, DiNello described it as a “positive endorsement of the turnaround that is underway and allows us to execute on our strategy from a position of strength”.
“We enter this next chapter with a strong balance sheet and liquidity position supported by a diversified and retail focused deposit base. Our new leadership team, with the support of the reconstituted board, will continue to take the actions that are necessary to improve earnings, profitability and drive enhanced value for shareholders.”
NYCB started facing issues after reporting weak results for its fourth quarter, particularly in relation to its exposure to commercial real estate. In addition to that, last year, the bank had also acquired assets of the failed Signature Bank, which pushed it under the regulatory scanner.
