It’s Mnuchin to re$cue of NYCB
We are confident that NYCB is poised to sustainable shareholder value.
— Steve Mnuchin
Struggling lender New York Community Bank will receive a fresh $1 billion infusion of cash as part of a rescue package from investors including former Treasury Secretary Steve Mnuchin, capping a wild day in which the stock price tanked by some 40% before recovering prior to the closing bell.
NYCB’s share price rose 7.5% to $3.46 after it was announced that Mnuchin would take a seat on the board of directors.
Mnuchin’s Liberty Strategic Capital and Ken Griffin’s Citadel Securities are among the hedge funds and private equity firms that are taking part in the capital investment, according to a press release.
“We are confident that NYCB is poised to generate sustainable shareholder value,” Mnuchin said.
Joseph Otting, a former comptroller of the currency, will become the bank’s CEO.
The bank will receive a $450 million investment from Liberty Strategic Capital, $250 million from Hudson Bay Capital and $200 million from Reverence Capital.
The investors will receive stock in the company valued at $2 per share, along with convertible preferred stock that pays dividends every three months.
Trading in the bank’s stock was suspended earlier Wednesday after the share price plummeted to $1.86 from Tuesday’s close of $3.22.
Since the start of the year, the bank’s stock price has fallen by 66% as concerns abound over its commercial real-estate portfolio.
Last month, NYCB posted unexpected commercial real-estate loan losses and slashed its dividend, causing its stock price to sink to a nearly 27year low.
The bank’s shareholders filed a class-action lawsuit in Brooklyn federal court recently, accusing the company of defrauding them by failing to disclose it would set aside more money for credit losses.