• General
  • March 7, 2024
  • 3 minutes read

Troubled Bank NYCB Rescued By Mnuchin-Led Group

New York Community Bank (NYCB), an embattled NYSE-listed bank, has struck a rescue deal with a group of investors led…

NYCB logo

New York Community Bank (NYCB), an embattled NYSE-listed bank, has struck a rescue deal with a group of investors led by Steve Mnuchin, a prominent financier and former U.S. Treasury Secretary under the Trump administration.

Liberty Strategic Capital, a private equity firm Mnuchin founded in 2021, will lead a $1bn equity investment in NYCB, whose stock recently slipped to its lowest level in nearly three decades.

  • Liberty Strategic Capital will invest $450mn, Hudson Bay Capital will invest $250mn, and Reverence Capital Partners will chip in $200mn. The rest of the funding will come from other investment firms.

As part of the investment, NYCB will get four new board directors: Steve Mnuchin, former Comptroller of the Currency Joseph Otting, Hudson Bay executive Allen Puwalski, and Reverence Capital co-founder Milton Berlinski.

Steve Mnuchin
Steve Mnuchin

Otting will become NYCB’s new chief executive, and Alessandro DiNello, NYCB’s current Executive Chairman, will become Non-Executive Chairman.

Mnuchin and Otting aren’t new to rescuing distressed banks. During the 2008 financial crisis, Mnuchin led an investor group that acquired failed mortgage bank IndyMac. The bank was restructured under Mnuchin’s leadership as Chairman and was sold in 2015 for $3.4bn; Mnuchin pocketed hundreds of millions in personal profits.

Otting was the chief executive of IndyMac (renamed OneWest Bank), while Mnuchin served as Chairman. He’ll become the new chief executive of NYCB, hoping to strike gold once again with Mnuchin.

  • NYCB’s stock rose sharply after the rescue deal announcement, handing Mnuchin and co. a nearly 100% paper profit and a chance to earn billions more. If NYCB’s share price returns to where it was a few months ago, the Mnuchin-led group is looking at profits topping $5bn.

NYCB is a major lender to office building and apartment developers in New York. Its heavy exposure to commercial real estate loans has led to billions of dollars in losses amid the recent market slump. Last week, the bank reported that its loss in the fourth quarter of 2023 was $2.4bn worse than stated, sinking its shares to a record low.

Mnuchin founded Liberty Strategic Capital in 2021 after leaving the Trump administration. The firm raised its first $2.5bn fund from prominent investors, including technology conglomerate SoftBank, Abu Dhabi sovereign wealth fund Mubadala, and Saudi sovereign wealth fund PIF.

Liberty primarily invested in technology startups before the latest foray into the banking sector, Mnuchin’s familiar industry.


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