The Federal Deposit Insurance Corp. announced late Sunday that New York Community Bank agreed to purchase a substantial portion of Signature Bank’s failing assets in a $2.7B deal.
Flagstar Bank will take over the 40 Signature Bank branches, effective Monday. Flagstar is a subsidiary of New York Community Bank. Signature Bank assets will be purchased for $38.4 Billion. This is less than a third the amount Signature had when it collapsed a week earlier.
Signature Bank loans worth $60 billion were placed in receivership by the FDIC. They are expected to be liquidated at some point.
Signature Bank was the 2nd bank to go under in the banking crisis. It happened approximately 48 hours after the collapse at Silicon Valley Bank. Signature Bank, which was based in New York, had been a major commercial lender in the tristate region. However, it had recently diversified into cryptocurrency as a growth opportunity.
Following the failure of Silicon Valley Bank, depositors began to worry about Signature Bank’s future health. This was due to Signature Bank’s high uninsured deposits and exposure to crypto-focused lending. Signature Bank was the third-largest bank failure in U.S history by the time it was shut down by regulators.
FDIC claims Signature Bank’s failure will result in the bank’s loss of $2.5 billion. However, this number could change as the regulator sells assets. The deposit insurance pool is funded by bank assessments. When a bank fails, taxpayers don’t bear the direct costs.
