New York Community Bancorp’s subsidiary, Flagstar Bank, has announced plans to cut approximately 1,900 jobs as part of a broader effort to restructure and streamline its operations.
The layoffs form part of the bank’s strategic transformation aimed at integrating three legacy banks acquired in recent years.
The initial phase of job reductions has eliminated around 700 positions across Flagstar’s operations, representing about 8% of its workforce. These cuts are part of the bank’s ongoing transformation strategy, which seeks to enhance efficiency and align its operational model for future growth.
An additional 1,200 jobs are expected to be cut following the completion of Flagstar’s sale of its mortgage servicing and third-party origination businesses to on-bank mortgage originator and servicer Mr. Cooper.
The $1.4bn transaction, which is anticipated to close in the Q4 2024, will offer many of the affected employees the chance to transition to Mr. Cooper, ensuring continued employment for the majority.
Announced in July this year, the completion of its residential mortgage servicing business is expected to add nearly 60 basis points to its CET1 capital ratio and expedite its transition to a diversified, full-service regional bank.
The transaction involves mortgage servicing rights (MSRs), advances, sub servicing contracts, and a third-party origination platform.
Flagstar chairman, president, and CEO Joseph Otting noted that the workforce reductions would not affect the bank’s service or advancement. He also stated many roles were duplicative following the integration of the three banks.
The restructuring focuses on improving management, refining its operational strategy, and strengthening its credit oversight and risk management framework.
Otting said: “While these strategic actions involve difficult decisions, including impacts on jobs, we believe they are essential for strengthening our financial foundation and building a more agile, competitive company.
“This will enable us to focus on strategic investments in other areas and better serve our clients and shareholders, ensuring long-term sustainability and profitability.
“We have made significant progress this year and will continue to pursue opportunities to optimise our operations and enhance efficiency, paving the way for a more resilient and successful future.”
