(Reuters) – Embattled regional lender New York Community Bancorp said on Tuesday it has agreed to sell about $5 billion in mortgage warehouse loans to JPMorgan Chase.
The deal bolsters NYCB’s liquidity and capital as it executes a crucial turnaround to return to profitability over the next two years.
NYCB expects the transaction will add 65 basis points to its CET1 capital ratio and bolster its liquidity profile as the proceeds of the sale will be reinvested into cash and securities, it said.
On a pro-forma basis, the ratio of cash and securities to total assets is projected to improve to 24% from 20% as of March 31, the bank said, and added that its pro-forma loan-to-deposit ratio is expected to decline to 104% compared with 110% at the end of the first quarter.
The sale of its loans comes after NYCB promised to shrink its balance sheet by reducing non-core assets.
It had said it would cut exposure to the commercial real estate sector, its core business, which has been roiled by higher borrowing costs and lower occupancy, to around $30 billion from nearly $47 billion at the end of March.
In March, NYCB also disclosed it had sold consumer loans worth $899 million and a commercial co-operative loan in late February.
(Reporting by Akanksha Khushi and Niket Nishant in Bengaluru; Editing by Shounak Dasgupta)
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