Signature Bank asset sale to NY Community Bancorp excludes crypto deposits
The U.S. Federal Deposit Insurance Corporation (FDIC), which last weekend assumed control as receiver of both Silicon Valley Bank and Signature Bank, has been able to resolve one of those situations. The FDIC announced that it has entered into a purchase and assumption agreement for substantially all deposits and certain loan portfolios of Signature Bank with Flagstar Bank, which is a wholly owned subsidiary of New York Community Bancorp (NYSE:NYCB).
The 40 former branches of Signature Bank will operate under New York Community Bancorp’s Flagstar Bank effective Monday, March 20, 2023. The branches will open during their normal business hours. Customers of Signature Bank should continue to use their current branch until they receive notice from the assuming institution that full-service banking is available at branches of Flagstar Bank.
The transaction excludes about $4 billion in crypto asset deposits with Signature Bank. The FDIC said that it will provide these deposits directly to customers whose accounts are associated with Signature’s “digital banking” business.
Depositors of Signature Bank (other than depositors related to the digital banking business), will automatically become depositors of the assuming institution. All deposits assumed by Flagstar Bank will continue to be insured by the FDIC up to the insurance limit.
As of December 31, 2022, Signature Bank had total deposits of $88.6 billion and total assets of $110.4 billion. The NY Community Bancorp transaction includes the purchase of about $38.4 billion of Signature Bank’s assets, including loans of $12.9 billion purchased at a discount of $2.7 billion. Approximately $60 billion in loans will remain in the receivership for later disposition by the FDIC. In addition, the FDIC received equity appreciation rights in New York Community Bancorp common stock with a potential value of up to $300 million.
The FDIC estimates the cost of the failure of Signature Bank to its Deposit Insurance Fund to be approximately $2.5 billion. The exact cost will be determined when the FDIC terminates the receivership.
The FDIC still has to deal with the assets of Silicon Valley Bank, which was about twice as big as Signature Bank. Reports are that the FDIC is aiming to relaunch an auction for all or most of SVB’s assets, after failing last weekend to find a buyer before putting the bank into receivership.