New York Community Bank, in a $2.7 billion deal, has agreed to acquire a significant portion of the failed Signature Bank, according to the Federal Deposit Insurance Corp. This move will result in the transformation of the 40 branches of Signature Bank into Flagstar Bank, which is one of New York Community Bank’s subsidiaries. As part of the deal, New York Community Bank will purchase $38.4 billion worth of Signature Bank’s assets, which represents over a third of the bank’s total assets at the time of its failure.
The FDIC has stated that $60 billion of Signature Bank’s loans will remain in receivership and are expected to be sold off in the future. Signature Bank was the second bank to fail in the current banking crisis, occurring just 48 hours after the collapse of Silicon Valley Bank. While Signature Bank was a major commercial lender in the tristate area, it had also ventured into cryptocurrencies in recent years in an attempt to pursue potential growth opportunities in this sector.
Following the failure of Silicon Valley Bank, depositors became concerned about the health of Signature Bank, given its significant amount of uninsured deposits and its exposure to cryptocurrency and tech-focused lending. By the time regulators shut down the bank, Signature Bank had become the third largest bank failure in U.S. history.
The FDIC estimates that Signature Bank’s failure will cost the deposit insurance fund $2.5 billion, although this figure may fluctuate as assets are sold off. It is important to note that taxpayers do not bear the direct cost of a bank failure, as the deposit insurance fund is financed through assessments on banks.
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