- ORIGINAL NEWS
Some NYCB deposits may be a flight risk after Moody’s downgrades ratings again
- SUMMARY
NYCB, a regional bank, faces increased borrowing costs due to a recent downgrade in its ratings by Moody’s.
This could trigger contractual requirements from clients who demand an investment-grade rating.
NYCB’s stock has been plummeting since reporting a quarterly loss and loan setbacks.
The bank may have to pay more to retain deposits, especially from its mortgage escrow unit with significant deposits.
Analysts suggest that NYCB may explore raising brokered deposits or issuing debt, but this could come at a higher expense.
The uncertainty surrounding NYCB’s ratings and deposits has raised speculation about potential deposit flight.
- NEWS SENTIMENT CHECK
- Overall sentiment:
negative
Positive
Negative
“NYCB finds itself in a stock freefall that began a month ago when it reported a surprise fourth-quarter loss and steeper provisions for loan losses.”
“Consumer deposits at FDIC-insured banks are covered up to $250,000.”
“Moody’s Investors Service cut the deposit rating of NYCB’s main banking subsidiary by four notches, to Ba3 from Baa2, putting it three levels below investment grade.”
“Shares of the bank have fallen 73% this year, including a 23% decline Monday, and now trade hands for less than $3 apiece.”
“The ratings cuts could affect funds in at least two areas: a “Banking as a Service” business with $7.8 billion in deposits as of a May regulatory filing, and a mortgage escrow unit with between $6 billion and $8 billion in deposits.”
“”There is potential risk to servicing deposits in the event of a downgrade,” Citigroup analyst Keith Horowitz said in a Feb. 4 research note.”