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UPDATE 1-Moody's downgrades NYCB ratings to junk

(Rewrites, adds details from Moody’s release throughout)

Feb 6 (Reuters) – Rating agency Moody’s downgraded New York Community Bancorp’s long-term and short-term issuer ratings to junk on Tuesday and warned of further downgrades.

The agency also downgraded all long-term and some short-term ratings and assessments of its lead bank, Flagstar Bank.

Moody’s downgraded NYCB’s ratings from Baa3 to Ba2, which is considered a junk rating.

The downgrade reflects Moody’s views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense – the risk and audit functions of the bank – at a pivotal time, the agency said.

The rating agency also said the elevated use of market funding may limit the bank’s financial flexibility in the current environment. (Reporting by Gursimran Kaur in Bengaluru; Editing by Rashmi Aich)

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