Moody's places embattled lender NYCB on 'review for upgrade'

(Reuters) - Ratings agency Moody's said on Thursday it had changed the direction of its rating view of New York Community Bancorp (NYCB) to "review for upgrade" from "review for downgrade".

The new rating follows the bank's announcement on Wednesday that it had raised $1 billion from investors including former U.S. Treasury Secretary Steven Mnuchin's Liberty Strategic Capital and also named Joseph Otting, a former Comptroller of the Currency, as its new CEO.

Moody's changed the direction of its review as the capital raise will increase NYCB's common equity tier 1 (CET1) ratio - a key measure of financial strength - to 10.3% on a proforma basis, assuming full conversion of the preferred equity to common, from 9.2% reported at Dec. 31, 2023.

NYCB's "planned capital raise could help stabilize its franchise following the tumultuous series of events that have occurred in recent weeks, and could improve its creditworthiness," according to Moody's.

The agency also continues to believe that NYCB may have to further increase its provisions for credit losses.

Last week, Moody's had downgraded NYCB's long-term issuer rating to "B3" from "Ba2".

NYCB's new CEO said earlier on Thursday that the company is seeing interest from non-bank bidders for some of its loans and will outline a new business plan next month, after the bank slashed its dividend again and disclosed deposits fell 7%.

(Reporting by Juby Babu in Bengaluru; Editing by Sherry Jacob-Phillips)