NEW YORK. The New York Public Bank has agreed to buy a significant stake in failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corporation said late Sunday.
Starting Monday, 40 branches of Signature Bank will become Flagstar Bank. Flagstar is one of the subsidiaries of New York Community Bank. The deal will include a $38.4 billion purchase of Signature Bank’s assets, just over a third of Signature’s total when the bank went bankrupt a week ago.
The FDIC said the $60 billion in Signature Bank loans will remain in receivership and are expected to be sold on time.
Signature Bank became the second bank to fail during this banking crisis, about 48 hours after the collapse of Silicon Valley Bank. Signature, based in New York, has been a major commercial lender in the tri-state region, but has taken to cryptocurrencies in recent years as a potential growth business.
Since the bankruptcy of Silicon Valley Bank, savers have become concerned about the health of Signature Bank due to its large number of uninsured deposits, as well as its exposure to cryptocurrencies and other technology-focused lending. By the time it was shut down by regulators, Signature was the third-largest bank failure in U.S. history.
The FDIC says it expects Signature Bank’s failure to cost the deposit insurance fund $2.5 billion, but that figure could change as the regulator sells off assets. The deposit insurance fund is paid for by banks’ contributions, and there are no direct costs for taxpayers in the event of a bank failure.