NYCB's stock price plummeted after it released disastrous fourth-quarter earnings and several executives left.
A series of worrying events at New York Community Bank (NYCB) recently have many Bitcoin investors expecting another crisis in the U.S. banking industry, which could lead to a resurgence of funds into the digital currency.
The bank’s stock has fallen 41% over the past month, including a 28% plunge on Friday alone. At the time of writing, it was trading at $3.55, its lowest share price since 1996.
What happened to NYCB?
NYCB has already suffered significant losses after disclosing the resignation of CEO Thomas Cangemi in early February. Since February 6, Executive Chairman Alessandro DiNello has effectively become the new leader of the bank.
On February 25, NYCB director Hanif “Wally” Dahya said in a letter that he “does not support the nomination of DiNello as CEO.” Dahya also resigned from the board.
The latest development came late Thursday when the bank revealed that its previously disclosed fourth-quarter loss of $252 million had been revised tenfold to $2.7 billion.
The widened loss was related to a $2.4 billion non-cash impairment charge on "goodwill" related to decades-old transactions, which the bank said would not affect regulatory capital.
However, in a separate statement, the bank’s management said it had identified “significant weaknesses in internal controls” due to “ineffective oversight, risk assessment and monitoring activities.”
On Friday, NYCB sought to appease investors by announcing a new chief risk officer and chief accounting executive to compensate for recent departures. According to Bloomberg, CEO DiNello added:
“The company has strong liquidity and a solid deposit base, and I am confident we will execute on our turnaround plan to increase shareholder value.”
Banking Crisis 2.0?
NYCB was responsible for the acquisition of Signature Bank, a pro-cryptocurrency firm that was forced to close in March 2023 following a wave of withdrawals that affected regional banks across the country.
Other major cryptocurrency banks, including Silvergate Bank and Silicon Valley Bank, were also forced to close at the time. When the U.S. government chose to bail out depositors at the latter, the price of Bitcoin rose from $19,000 to $30,000 in the following days.
BitMEX co-founder Arthur Hayes posted to X on February 5: "JAYPOW said the US economy and banking industry are very strong. The opposite is true for NYCB." "Bailout is coming, 1 BTC equals one million US dollars." #NYCB #股价
