Troubled regional lender, New York Community Bank, has raised over $1bn in a capital raise. The rescue package is led by former Treasury Secretary Steve Mnuchin’s Liberty Strategic Capital. Other backers include Hudson Bay Capital, Reverence Capital Partners and Citadel Global Equities. The deal is subject to finalisation of definitive documentation and receipt of applicable regulatory approvals. Liberty is expected to invest $450m, Hudson Bay will invest $250m, and Reverence will invest $200m as part of the transaction.
The bank will add four new directors to its board, including Steven Mnuchin, the 77th Secretary of the Treasury. Also joining the board are Joseph Otting, former Comptroller of the Currency, Allen Puwalski from Hudson Bay, and Milton Berlinski, Managing Partner of Reverence Capital.
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New CEO and non-executive chairman
Otting will become CEO with DiNello will be named as non-executive chairman. Mnuchin said: “In evaluating this investment, we were mindful of the bank’s credit risk profile. With the over $1bn 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 NYCB’s large bank peers.”
DiNello added: “We welcome the approach that Liberty and its partners took in its evaluation of the bank. We look forward to incorporating their insights going forward. The strategic investment involving former Secretary Steven Mnuchin, former Comptroller Joseph Otting and Milton Berlinski, along with the other institutional investors is a positive endorsement of the turnaround that is underway and allows us to execute on our strategy from a position of strength. We enter this next chapter with a strong balance sheet and liquidity position. This is supported by a diversified and retail focused deposit base. Our new leadership team will continue to take the actions that are necessary to improve earnings, profitability and drive enhanced value for shareholders.”
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