Moody’s Investors Service downgraded New York Community Bank’s credit ratings two notches to junk. /p>
Moody cited “multi-faceted financial, risk-management and governance challenges” at NYCB in its note downgrading the bank. It also downgraded all the bank’s long-term ratings to Ba2 from Baa3, which is junk status, partly on concerns about turnover of the firm’s risk management leaders, and warned the assessments remain on review for further downgrade.
The downgrade reflects Moody’s views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense, the risk and audit functions of the bank, at a pivotal time.In Moody’s view, control functions with strong knowledge of a bank’s risks are key to a bank’s credit strength.
The downgrade is par for the course. The regional bank has been in free fall recently, shedding more than 50% of its market value across a punishing series of trading sessions, since reporting a surprise fourth-quarter loss, along with mounting losses on commercial real estate and the need to slash its dividend by 71% to shore up capital levels.
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