The Federal Deposit Insurance Corp. said late Sunday that New York Community Bank has agreed to buy a significant portion of failed Signature Bank in a $2.7 billion deal.
Signature Bank’s 40 branches will become Flagstar Bank starting Monday. Flagstar is one of the subsidiaries of New York Community Bank. The deal would involve the purchase of $38.4 billion in Signature Bank’s assets, a little more than a third of Signature’s total when the bank failed a week earlier.
The FDIC said $60 billion of Signature Bank’s loans will remain in receivership and are expected to be sold over time.
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, was a large commercial lender in the tristate area, but in recent years has become involved in cryptocurrencies as a potential growth business.
After the Silicon Valley bank failed, depositors became concerned about the health of Signature Bank because of its high amounts of unsecured deposits as well as its exposure to crypto and other tech-focused lending. By the time it was shut down by regulators, Signature was the third largest bank failure in US history.
The FDIC says the Signature Bank failure is expected to cost the Deposit Insurance Fund $2.5 billion, but that figure could change as the regulator sells off assets. Deposit Insurance Fund is paid on the basis of the assessment of banks and taxpayers do not bear the direct costs in case of bank failure.