New York Community Bank buys Signature Bank failed
Community Bank of New York has agreed to buy a substantial portion of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corporation said late Sunday. .
Signature Bank’s 40 branches will become Flagstar Bank, starting Monday. Flagstar is one of the subsidiaries of Community Bank of New York. The deal will include the purchase of $38.4 billion in Signature Bank assets, more than a third of Signature’s total when the bank went bankrupt a week ago.
The FDIC said the Signature Bank’s $60 billion loan will remain available and is expected to be sold off in due course.
Signature Bank was the second bank to fail in this banking crisis, about 48 hours after the collapse of Silicon Valley Bank. Signature, based in New York, is a major commercial lender in the tri-state region, but in recent years has gotten involved in crypto as a potential growth business.
After the failure of the Silicon Valley Bank, depositors became concerned about the health of Signature Bank due to the high volume of uninsured deposits as well as potential exposure to cryptocurrencies and donations. other technology-focused loans. At the time it was shut down by regulators, Signature was the third-largest bank failure in US history.
The FDIC said it expected the Signature Bank failure to cost the deposit insurance fund $2.5 billion, but that figure could change as the regulator sells off assets. The deposit insurance fund is paid by bank assessment and taxpayers do not incur direct costs in the event of a bank failure.