From CNBC:

New York Community Bank may have to pay more to retain deposits after Moody’s Investors Service cut its deposit rating for the second time in a month. The regional lender’s stock has plummeted 72% this year, with concerns rising over loan losses and deposit levels.

Analysts speculate about a possible flight of deposits since Moody’s began slashing NYCB’s ratings. The ratings cuts could impact funds in areas like a “Banking as a Service” business with $7.8 billion in deposits and a mortgage escrow unit with up to $8 billion in deposits. Potential risks to servicing deposits exist with the downgrade.

NYCB executives have confirmed that the bank’s mortgage escrow business needs to maintain an investment grade status and that deposit levels fluctuate between $6 billion and $8 billion. The bank could raise brokered deposits, issue new debt, or borrow from the Federal Reserve’s facilities to replace lost deposits at a higher cost.

It remains unclear what contractual obligations from counterparties of NYCB require in the event of a breach of investment grade status, or if downgrades from multiple ratings firms would be needed to trigger contractual provisions. The bank has not yet commented on the recent developments.



Read more: Some NYCB deposits may be at risk after another Moody’s downgrade