Troubled New York Community Bancorp said Friday it was laying off 700 workers at its Flagstar subsidiary as it tries to regain profitability after being rescued by investors earlier this year.
The bank said the cuts amounted to 8% of its workforce and that a further 1,200 cuts would be made once it completes the sale of the rest of its business in late 2024.
Shares of Hicksville, New York-based NYCB fell less than 1% to $12.30 apiece on Friday afternoon.
In March this year, NYCB received a bailout of over $1 billion from a group of investors after its stock fell by more than 80%.
The bank was attacked weakness in commercial real estate and the growing pains of buying it out a bank in difficulty.
This cash injection brought four new directors to the NYCB board, including Steven Mnuchin, who served as US Treasury Secretary under President Donald Trump. Joseph Otting, a former controller of the currency, became the bank’s general manager.
Under the agreement, NYCB would attract investments worth $450 million from Mnuchin’s Liberty Strategic Capital, $250 million from Hudson Bay Capital and $200 million from Reverence Capital Partners. In March, the bank reported that total cash from other institutional investors and some of the bank’s management amounted to more than $1 billion.
NYCB was a relatively unknown bank until last year when bought the assets of Signature Bank at auction on March 19 for $2.7 billion. Signature was one of the banks that collapsed in last year’s industry mini-crisis, during which a bank run also accelerated the collapse of Silicon Valley Bank.
NYCB’s sudden growth in size meant it was subject to increased regulatory scrutiny. That has been one of the challenges for the bank as it tries to reassure depositors and investors that it can consider buying Signature Bank amid a struggling real estate portfolio. Losses on commercial real estate loans forced it to report a surprise loss for the latest quarter, prompting investor concerns about the bank.