New York Community Bancorp has taken over Signature Bank post-collapse, and had assumed most of its deposits.
The US Federal Deposit Insurance Corporation (FDIC) announced Sunday evening that New York Community Bancorp had taken over Signature Bank.
The news comes one week after the crypto-friendly bank had collapsed within a span of a few days, alongside tech-focused Silicon Valley Bank, creating anxieties in the US financial system.
New York Community Bancorp’s subsidiary Flagstar Bank will now be responsible for operating Signature Bank’s 40 branches as of Monday, and will handle “substantially all” of Signature’s deposits. These deposits, totalling $88.6 billion at the end of 2022, will go towards Flagstar, but $4 billion in digital banking deposits that weren’t included in the sale will still be handled by the FDIC.
New York Community Bancorp had also bought $38.4 billion worth of loans and assets previously held by Signature, but $60 billion in loans will remain in FDIC custody, which took over Signature upon its shutdown by New York state regulators last weekend.
According to the FDIC, Signature’s collapse will cost the federal Deposit Insurance Fund roughly $2.5 billion. The federal Deposit Insurance Fund is funded by payments from banks.
Last year, New York-based Signature Bank held $110 billion in assets. Last week, it became the third-largest bank failure in US history, after Washington Mutual’s failure in 2008 and Silicon Valley Bank’s failure just two days before Signature’s shutdown.
Signature Bank was known for its friendliness towards crypto firms, however it started to pivot away from crypto last year, after plunges in crypto prices harmed the bank.
Silicon Valley Bank’s downfall caused Signature Bank’s collapse, as Signature experienced a surge of withdrawals upon SVB’s failure.
Last weekend, the FDIC claimed responsibility for Signature and SVB, and promised to safeguard all deposits contained in both banks, even if they exceed the normal $250,000 per account insured by the federal government as a move to prevent a broader financial crisis.
It currently is unclear whether SVB will also find a buyer. SVB ranked within the US’s top 20 largest banks before its collapse, prompted by rising interest rates which diminished the value of its assets, sparking a massive bank run.
Reportedly, the FDIC has been experiencing difficulty in selling SVB in one piece, and is considering selling its wealth management division, its assets, and its liabilities separately.
