New York Community Bank buys Bankrupt Signature Bank
New York Community Bank has agreed to buy a major share of the bankrupt Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp announced Sunday.
The 40 branches of Signature Bank will become Flagstar Bank from Monday. Flagstar is a subsidiary of New York Community Bank. The deal will include the purchase of $38.4 billion in assets from Signature Bank, just over a third of Signature’s total when the bank went bankrupt a week ago.
The FDIC said $60 billion in loans from Signature Bank will remain in escrow and should be sold in time.
Signature Bank was the second bank to fail in this banking crisis, about 48 hours after Silicon Valley Bank collapsed. New York-based Signature used to be a major commercial lender in the tri-state area, but in recent years had moved into cryptocurrencies as a potential growth business.
After the failure of Silicon Valley Bank, depositors grew concerned about the health of Signature Bank due to its high volume of uninsured deposits as well as its exposure to crypto and other tech-focused lending . At the time it was shut down by regulators, Signature was the third-largest bank failure in U.S. history.
The FDIC says it expects Signature Bank’s failure to cost the deposit insurance fund $2.5 billion, but that figure could change as the regulator sells assets. The deposit insurance fund is financed by contributions from banks, and taxpayers do not bear the direct cost when a bank fails.