(Bloomberg) — New York Community Bancorp's credit rating was downgraded to “junk” by Fitch Ratings and Moody's Investors Service lowered its rating even further, a day after the commercial real estate lender said it had “material weaknesses” in monitoring of credit risks identified.
Most read by Bloomberg
Fitch downgraded the bank's long-term issuer default rating from BBB- to BB+, one notch below investment grade, according to a statement Friday. Moody's, which downgraded the bank to junk status last month, cut its issuer rating to B3 from Ba2.
The bank's discovery of vulnerabilities “led to a review of NYCB's controls over the adequacy of reserves, particularly with respect to its concentrated exposure to commercial real estate,” Fitch said.
Read more: NYCB highlights weaknesses in credit supervision, names new CEO
The bank's announcement Thursday that it would need to strengthen loan reviews renewed concerns among investors about the company potentially risking troubled commercial property owners, including apartment landlords in New York. The stock plunged 26% on Friday, even as the company said it did not expect control weaknesses to lead to changes in loan loss provisions.
“Moody's expects that NYCB may need to further increase its loan loss provisions over the next two years due to credit risk on its office loans,” the credit rater said in a statement. It also flagged “significant repricing risk on its multifamily loans.”
NYCB stock ended the week at $3.55, down 65% this year.
“The company has strong liquidity and a solid deposit base,” Chief Executive Alessandro DiNello, who took over this week, said in a statement Friday. “I am confident that we will execute our turnaround plan to increase shareholder value.”
The story goes on
Most read by Bloomberg Businessweek
©2024 Bloomberg LP