The FDIC announced Monday that it had reached an agreement to sell most of the failed Signature Bank's assets to New York Community Bank-owned Flagstar. Photo by Justin Lane/EPA-EFE
March 20 (UPI) -- Failed New York crypto lender Signature Bank has been taken over by Flagstar Bank for a heavily discounted $2.7 billion, the Federal Deposit Insurance Corporation has announced.
The deal sees New York Community Bank-owned Flagstar, which has 158 branches in the Mid-West and California, purchase $38.4 billion of Signature's assets from the FDIC -- but not its $4 billion digital business, which is in the FDIC's bank resolution process, said the agency in a news release Sunday.
All 40 of Signature's former branches will open as normal Monday morning and operate at their normal hours with customers being advised to continue using their current branch until being notified by Flagstar that full-service banking is available at its branches.
The FDIC said it would return deposits associated with the digital banking business directly to customers.
The FDIC estimates the final cost of the failure of Signature Bank to its Deposit Insurance Fund will be around $2.5 billion after selling the remaining $60 billion of Signature's assets, with the exact cost to be determined when the FDIC terminates its receivership.
As of Dec. 31, the former Signature bank had total deposits of $88.6 billion and total assets of $110.4 billion.
The takeover comes one week after Signature became the second bank in a matter of days to be shut down by regulators in an effort "to protect investors," with President Joe Biden acting to assuage fears over the stability of the financial system by vowing to continue efforts to strengthen oversight and regulation.
California's Silicon Valley Bank, a tech startup lender, became the first major bank to fail in more than two years after being forced to close its doors by state regulators on March 10. Just two days earlier, Silvergate Bank, another major California-based crypto bank, said that it would "wind down operations" and begin the process of voluntary liquidation.
On Friday, SVB Financial Group, the former parent of collapsed SVB, filed for Chapter 11 bankruptcy in New York.
SVB Financial Group said in a statement while it is the holding company for SVB Capital and SVB Securities, both of those businesses are not part of the bankruptcy. The statement also said SVB Financial is no longer affiliated with Silicon Valley Bank or the bank's private banking and wealth management business, SVB Private.