- The lenders’ Signet division, which dropped from $30 billion to $4 billion since last year, remains with the FDIC.
- Signature collapse would cost the federal Deposit Insurance Fund $2.5 billion.
Flagstar Bank’s parent company, New York Community Bank (NYCB), will take over ‘substantially all‘ of the operations of Signature Bank, excluding cryptocurrency deposits, the Federal Deposit Insurance Corporation announced Sunday.
The purchase and assumption agreement includes about $38.4 billion in assets and loans worth $12.9 billion sold to Flagstar at a discount of $2.7 billion. FDIC took over the receivership of Signature on March 20 and created a ‘bridge’ institution to facilitate the wind-down process.
The estimated cost of the collapse of Signature Bank to the deposit insurance fund stands at about $2.5 billion. $60 billion in loans, according to the press release, would remain under receivership to be disposed of later. For nearly $13 billion in Signature loans, NYCB paid more than $10 billion below the loan’s face value of $0.8 per dollar.
Besides, the regulator would receive equity appreciation rights in the New York Community Bank with a potential value estimated at $300 million.
Signature Bank’s Branches To Rename Flagstar
NYCB would reportedly take over the 40 branches of Signature bank and would be rebranded to Flagstar. The takeover does not include Signature’s Signet, a crypto division that dropped to $4 billion from $30 billion last year. Instead, FDIC said it seeks to send the assets to account holders and later sell the unit.
Signature’s collapse marked the third largest bank failure in the US since the 2008 financial crisis, behind Washington Mutual and Silicon Valley Bank, another crypto-friendly lender also taken over by the FDIC.
Following the shutdown – which the authorities claim was to protect the financial systems from another collapse – FDIC promised to make the depositors whole, including those with deposits exceeding the $250,000 insurable limit.
