Moody's puts NYCB's ratings on review for an upgrade

Moody's Ratings Agency said Thursday that it has changed its view on New York Community Bancorp's (NYCB's) rating from a "review of downgrade" to a "review of upgrade".

This new rating comes after the bank announced on Wednesday it raised $1 billion in investment from Liberty Strategic Capital, a company owned by former U.S. Treasury Sec. Steven Mnuchin. It also appointed Joseph Otting as the new CEO, formerly the Comptroller-of-the Currency.

Moody's has changed its direction in their review. The capital raise is expected to increase NYCB's CET1 ratio, which is a measure of financial health, to 10,3%, on a pre-forma basis. This assumes that the preferred equity will be converted to common stock, up from the 9.2% at December 31, 2023.

Moody's says that NYCB's planned capital raise "could help stabilize the franchise after the recent tumultuous events and improve its creditworthiness."

NYCB's provision for credit loss may also need to be increased, according to the agency.

Moody's downgraded NYCB's Long-Term Issuer Rating to "B3", from "Ba2" last week.

NYCB's CEO announced earlier Thursday that non-banks are interested in some of the loans the company offers. The bank will also outline a business plan for next month after it slashed the dividend and revealed 7% declines in deposits.