Former Trump Treasury Secretary Helps NYCB Rebound from 42% Drop
The NYCB stock fell 42% and then rebounded quickly afterward when it was announced that the company would be raising $1 billion in capital.
The dramatic turnaround followed additional news from the bank that they would be changing up leadership. One of the additions to the board was Steven Mnuchin, who served as Treasury Secretary under former President Donald Trump from 2017 to 2021.
NYCB released a statement on Wednesday saying that it had come to an agreement with a few investment firms. The bank is now partnered with Reverence Capital Partners, Liberty Strategic Capital, and Hudson Bay Capital. Together, these partners would raise more than $1 billion for the bank and be given equity in the bank in return.
Steve Mnuchin leads Liberty Strategic Capital, and as part of the agreement between the bank and these investment partners, Mnuchin would be added to the board of directors. Joseph Otting is set to step in as CEO.
When the announcement was made, the stock rebounded quickly, but trading was very active all day long. The stock ended the day with a gain of 7% after vigorous rounds of trading.
A Recovering Institution
The bank had been troubled for much of the year up until the announcement and rebound. The bank’s credit rating was lowered to junk status by Moody’s Investors Service. Also, in January, the bank revealed that it was allowing for more loan losses thanks to its deep commitment to commercial real estate ventures.
The shakeup in management was primarily meant to stabilize the company and help it find a new direction after some rough turns. For now, the efforts have appeared to pay off and help the bank get back in the good graces of its stockholders.
The cash infusion is designed to help the bank regain its financial footing and face the rest of 2024 better prepared to deal with any further losses.
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