March of 2023 was marked by a deep crisis for the regional banking sector, and now, almost exactly one year later, history is repeating itself with a new turmoil unfolding once more.
Notably, shares of New York Community Bank (NYCB) experienced a dramatic drop of over 40% early on Wednesday following a report by The Wall Street Journal saying the embattled lender is receiving a financial boost of more than $1 billion.
A substantial portion of this investment, $450 million, was provided by Liberty Strategic Capital, led by former Treasury Secretary Steven Mnuchin. Additional funding came from Hudson Bay Capital, Reverence Capital Partners, and Citadel Global Equities, along with other institutional investors and select members of the company's management team.
In terms of market reaction, the key difference between this upheaval and the one last year is that the investors are “treating this as an isolated event, and it's not even hurting small-caps in general with IWM up ~1%,” said analysts at BTIG.
“Overall breadth is quite strong today bouncing back from yesterday's losses, but the big question is does the playbook of the entire year repeat itself, or are we going to see something different?,” analysts noted in a Wednesday note.
“The playbook has been every two-day pullback gets immediately bought and new highs are seen imminently,” they added.
Analysts mentioned that a resolution to the crisis is not anticipated today, however, if new highs above 5150 are not achieved by Friday, it would mark a notable shift. Moreover, a fall below yesterday's lows of 5056 would also signify “a notable change in character,” according to the analysts.
“That would also break the uptrend in place from early November,” they said.