NEW YORK — Embattled New York Community Bancorp announced a lifeline of more than $1 billion from a group of investors on Wednesday, after seeing its stock plunge by more than 80% this year.
The announcement sent shares of the bank, which has been hammered by weakness in commercial real estate and growing pains resulting from its buyout of a distressed bank, on a wild ride. After nearly halving early in the day, the stock surged nearly 30% after the announcement, only to give it all up and then swivel before ending with a gain of 7.5%.
The deal will bring four new directors to NYCB’s board, including Steven Mnuchin, who served as U.S. Treasury secretary under President Donald Trump. Joseph Otting, a former comptroller of the currency, will become the bank’s CEO.
Under the deal, which the bank said still needs “finalization of definitive documentation” and regulatory approvals, NYCB would get investments of $450 million from Mnuchin’s Liberty Strategic Capital, $250 million from Hudson Bay Capital and $200 million from Reverence Capital Partners. Cash from other institutional investors and some of the bank’s management will take the total over $1 billion, the bank said.
The investors will receive stock in the company valued at $2 per share, along with convertible preferred stock that could pay dividends every three months.
The bank’s stock had tumbled 42% to $1.86 earlier Wednesday, before its trading was halted in the afternoon, pending news. A report from The Wall Street Journal earlier in the day had said the lender was considering raising cash through the sale of stock in order to shore up confidence in it.
After the announcement of the $1 billion infusion, NYCB’s stock immediately erased those losses and surged toward its best day in nearly a year. But the stock almost as quickly gave up all the gains before climbing into the close. It ended the day at $3.46.
Stocks of other regional banks, which have been caught up in nervousness around NYCB,…
Read the full article here
Leave a Reply