Flagstar Bank to Take Over Signature Bank’s Deposits and Loans
Flagstar Bank is set to take over $38.4 billion worth of non-cryptocurrency-related deposits and $12.9 billion in loans from Signature Bank, a New York Community Bancorp subsidiary that collapsed only a week ago.
The United States Federal Deposit Insurance Corporation announced the agreement on March 19. The takeover will officially take effect on March 20. However, Signature Bank’s crypto-related deposits, which amount to approximately $4 billion or 4.5% of the bank’s total $88.6 billion deposits as of December 31, will not be part of the deal.
Today, we entered into an agreement with a subsidiary of New York Community Bancorp, Inc., to purchase and assume deposits and assets out of Signature Bridge Bank. Read more ➡️ https://t.co/bSshY93lBh. pic.twitter.com/b9RBvYtGF7
— FDIC (@FDICgov) March 19, 2023
Flagstar Bank’s takeover deal
From March 20, Signature Bank’s 40 branches will operate as Flagstar Bank. All deposits assumed by Flagstar Bank will continue to be insured up to the $250,000 insurance limit.
Meanwhile, the FDIC confirmed that it would transfer the $4 billion worth of deposits held by Signature Bank’s digital assets business directly to customers who opened a digital banking account.
Crypto firms’ exposure to Signature Bank
Coinbase, Celsius, and Paxos are three crypto firms that have recently confirmed having some exposure to Signature Bank. Last week, a report from Reuters cited two sources who suggested that any buyer of Signature Bank would be required to divest crypto activities as part of a potential rescue plan.
However, an FDIC spokesperson denied this, stating that the agency did not require crypto divestment as part of any sale.
Accusations of lying
Castle Island Ventures partner Nic Carter believes the latest announcement shows that the FDIC “lied” in its response to Reuters. It remains to be seen how the FDIC will respond to Carter’s accusations.
The takeover comes after the FDIC created Signature Bridge Bank on March 12, following the New York Department of Financial Services closing the bank and appointing the FDIC as its receiver.