NYCB's Flagstar cuts 700 staff with more to depart in unit sale

New York Community Bancorp's Flagstar Bank is eliminating 700 jobs, or 8% of the workforce, as part of the lender's effort to turn around its business.

The company, which plans to take the Flagstar name later this month, also expects that a previously announced sale of its residential mortgage servicing business will reduce its workforce by an additional 1,200 employees when the transaction is completed this quarter.

"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," Chief Executive Officer Joseph Otting said Thursday in a statement that disclosed the figures. 

Otting, a former comptroller of the currency, is overhauling the bank after concerns about its exposure to New York commercial real estate sent the stock swooning this year. He took over as the company got a capital injection from a group of investors led by former Treasury Secretary Steven Mnuchin.

In July, NYCB announced an agreement to sell mortgage-servicing rights and the third-party origination platform to Mr. Cooper. Most of the employees affected by the sale will be offered opportunities to transfer to the buyer, NYCB said in Thursday's statement.