NYCB recovers from sharp losses as Steven Mnuchin's firm provides $1 billion equity investment
Summary
NYCB stock rose after a $1 billion investment deal was reached, led by Steven Mnuchins Liberty Strategic Capital. "With the over $1 billion of capital invested in the bank, we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCBs large bank peers," Mnuchin said in a statement, cited by Bloomberg.As part of the deal, the former Treasury Secretary will be added to the board of directors, alongside three other new additions.NYCB also announced that Joseph Otting, former comptroller of the currency, would take over as its CEO. Trading was halted multiple times for volatility throughout Wednesdays session.Year-to-date, the banks shares have shed over 67%, weighed down by real-estate loan worries, leadership shake-ups, and disclosure of internal control issues.NYCBs issues cropped up this year when the lender reported weak results for the fourth-quarter and highlighted a concerning exposure to commercial real estate. Cited problems included a lack of oversight and risk assessment.The turmoil at the bank has prompted comparisons to last years banking-system mayhem, during which three lenders collapsed. The acquisition also added to its dilemma, as its boosted size made NYCB subject to higher regulatory scrutiny.