FDIC announced Signature Bank would be sold to Flagstar Bank, a subsidiary of New York Community Bancorp, a week after the bank was placed into receivership
Image: pixabay
The Federal Deposit Insurance Corporation (FDIC) announced an agreement to sell substantially all deposits and certain loan portfolios of Signature Bridge Bank to Flagstar Bank, a wholly-owned subsidiary of New York Community Bancorp.
The transaction included the purchase of about $38.4 billion of Signature Bridge Bank’s (the bank FDIC created after placing Signature into receivership) assets. The loans of $12.9 billion were purchased at a discount of $2.7 billion. Another $60 billion in loans will remain in receivership. Additionally, Flagstar’s bid did not include $4 billion related to Signature’s digital banking business.
Initially, FDIC estimates the cost of the failure of Signature Bank to be approximately $2.5 billion. At the same time, the exact cost will be determined after the receivership terminates.
Signature Bank’s 40 branches will continue to operate under Flagstar’s ownership beginning today.
The New York-based Signature Bank, one of the largest lenders in the crypto industry, was closed by US regulators a week ago. The decision was made as part of wider efforts to prevent a large-scale crisis in the US banking system.
The FDIC also took over previously closed SVB and seized its deposits, after the bank suffered a massive run triggered by financial distress reports.
The closure of two US-based banks rocked the bottom of the wider banking industry, causing major consumer concerns in any cases where liquidity is at stake. On weekend, the Swiss banking industry was shaken by an unprecedented deal – UBS Group will buy Credit Suisse for 3 billion Swiss francs ($3.23 billion).
In addition, the collapse of two crypto-friendly banks deeply affected the crypto industry. For many years, Silvergate’s Silvergate Exchange Network (SEN) and Signature Bank’s Signet platforms enabled round-the-clock real-time payments, facilitating crypto-to-fiat exchange.
Without those valuable banking partners, crypto companies are forced to look for new ways to engage with fiat currency and accept dollar deposits.
