New York Community Bank has agreed to buy a significant portion of the failed Signature Bank in a $2.7 billion deal, Federal Deposit Insurance Corp. said late Sunday.
Signature Bank’s 40 branches will become Flagstar Bank starting Monday. Flagstar is one of the subsidiaries of New York Community Bank. The deal will include the purchase of $38.4 billion in Signature Bank assets, just over a third of Signature’s total when the bank failed a week ago.
The FDIC said $60 billion in Signature Bank loans will remain in receivership and are expected to be sold on time.
Signature Bank was the second bank to fail in this banking crisis, approximately 48 hours after the collapse of Silicon Valley Bank. New York-based Signature was a large commercial lender in the tri-state area, but had gotten into cryptocurrency in recent years as a potential growth business.
After the Silicon Valley Bank collapsed, depositors became nervous about the health of Signature Bank due to its large number of uninsured deposits, as well as its exposure to cryptocurrencies and other technology-focused lending. At the time it was shut down by regulators, Signature was the third-largest bank failure in US history.
The FDIC says it expects the Signature Bank failure to cost the deposit insurance fund $2.5 billion, but that figure may change as the regulator sells off assets. He deposit insurance fund it is paid for by bank assessments, and taxpayers do not bear the direct cost when a bank fails.
