(Reuters) – Ratings agency Moody's on Tuesday downgraded all long-term and some short-term issuer ratings of New York Community Bancorp to junk and warned of further downgrades.
The agency also downgraded all long-term ratings and some short-term ratings and ratings of its flagship bank, Flagstar Bank.
Moody's lowered NYCB's rating from Baa3 to Ba2, considered a junk rating.
This downgrade reflects Moody's view that NYCB faces high transition-related governance risks with respect to its second and third lines of defense, namely the bank's risk and audit function leadership, at a critical time. The department said.
Moody's said unexpected significant losses of NYCB's core historic commercial real estate (CRE) loans, New York office and multifamily properties, could trigger potential confidence sensitivity.
The increased availability of market funds could limit banks' financial flexibility in the current environment, the rating agency added.
New York CB did not respond to Reuters' request for comment.
The bank last week set aside larger-than-expected provisions for potential bad loans, mainly due to its exposure to CRE, where high interest rates and low occupancy rates put multiple borrowers at risk. .
Since the announcement of the financial results, at least 13 securities firms have downgraded or lowered their price targets for the bank's stock.
(Reporting by Gursimran Kaur and Shivani Tanna in Bengaluru; Editing by Rashmi Aich)
