The 40 branches of Signature Bank will become Flagstar Bank, starting Monday, the FDIC said late on Sunday.
New York Community Bank has agreed to buy a significant chunk of the failed Signature Bank in a $2.7bn deal, the Federal Deposit Insurance Corp says.
The 40 branches of Signature Bank will become Flagstar Bank, starting Monday, the FDIC said in a late Sunday announcement. Flagstar is one of New York Community Bank’s subsidiaries. The deal will include the purchase of $38.4bn in Signature Bank’s assets, a little more than a third of Signature’s total when the bank failed a week ago.
The FDIC said $60bn in Signature Bank’s loans will remain in receivership and are expected to be sold off in time.
The Sunday announcement addresses one of the two failed banks the FDIC is holding under receivership.
The statement did not refer to the other, Silicon Valley Bank (SVB), a much larger bank that regulators took over two days before Signature.
Signature had $110.36bn in assets, whereas SVB had $209 bn.
Signature, based in New York, was a large commercial lender in the tri-state area, but had in recent years gotten into cryptocurrencies as a potential growth business.
After SVB failed, depositors became nervous about Signature Bank’s health due to its high amount of uninsured deposits as well as its exposure to crypto and other tech-focused lendings. By the time it was closed by regulators, Signature was the third largest bank failure in US history.
The FDIC says it expects Signature Bank’s failure to cost the deposit insurance fund $2.5bn, but that figure may change as the regulator sells off assets. The deposit insurance fund is paid for by assessments on banks and taxpayers do not bear the direct cost when a bank fails.