The Federal Deposit Insurance Corp. announced late Sunday that New York Community Bank has agreed to pay USD 2.7 billion to acquire a sizeable portion of the failed bank, Signature.
Starting on Monday, Flagstar Bank will operate the 40 Signature Bank locations. Flagstar is one of New York Community Bank's subsidiaries.
The deal
The deal will include the purchase of USD 38.4 billion in Signature Bank's assets, a little more than a third of Signature's total when the bank failed a week ago.
According to the FDIC, debts from Signature Bank totaling USD 60 billion will remain under receivership and eventually be sold off.
48 hours after Silicon Valley Bank failed, Signature Bank became the second bank in this banking crisis to fall.
A significant commercial lender in the tristate region, Signature, based in New York, had recently entered the cryptocurrency market as a potential growth industry.
Silicon Valley Bank fail
After Silicon Valley Bank failed, depositors became nervous about Signature Bank's health due to its high amount of uninsured deposits as well as its exposure to crypto and other tech-focused lending.
When it was shut down by authorities, Signature was the third biggest bank collapse in American history.
The FDIC estimates that the failure of Signature Bank will cost the deposit insurance fund USD 2.5 billion, however that estimate is subject to change when the regulator liquidates assets.
Since bank assessments pay for the deposit insurance fund, taxpayers are not directly impacted when a bank fails.
