The Impact of Moody's Downgrades on New York Community Bancorp

📉Moody's downgrades on New York Community Bancorp have lowered its long-term credit rating to three levels below investment grade.

💰The downgrades may trigger the need for more collateral or the transfer of deposits to another bank, potentially costing NYCB more money to hold on to their deposits.

🏦Institutional clients, including Circle, a back office for some of the deposits, are concerned about the impact of the downgrades on NYCB.

💸The cost of money for NYCB may increase as a result of the downgrades.

🔒72% of NYCB's deposits were insured or collateralized, but roughly $15 billion of deposits could be at a flight risk.

What are the potential consequences of Moody's downgrades on NYCB?

—The downgrades could trigger the need for more collateral or the transfer of deposits to another bank, potentially costing NYCB more money to hold on to their deposits.

How much of NYCB's deposits could be at a flight risk?

—Roughly $15 billion of deposits, or 25% of the deposit base, could be at a flight risk.

Are institutional clients concerned about the downgrades?

—Yes, institutional clients, including Circle, a back office for some of the deposits, are concerned about the impact of the downgrades on NYCB.

What could be the impact on the cost of money for NYCB?

—The cost of money for NYCB may increase as a result of the downgrades.

Were the majority of NYCB's deposits insured or collateralized?

—Yes, 72% of NYCB's deposits were insured or collateralized.

00:14Shares of New York Community Bancorp plunged 20% yesterday, raising concerns about the bank's deposits.

00:55Moody's cut the long-term credit rating on NYCB's deposits to three levels below investment grade.

01:23The downgrades could trigger the need for more collateral or the transfer of deposits to another bank.

01:39Roughly $15 billion of deposits, or 25% of the deposit base, could be at a flight risk.

02:04Concerns about the flight risk pose added pressure to NYCB.