Flagstar Bank to buy some Signature Bank assets, but not crypto operations

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Flagstar Bank, a subsidiary of New York Community Bancorp, has signed a repurchase agreement with US regulators for certain Signature Banks assets and loans. Earlier this month, after Silicon Valley Banks customers all tried to withdraw their funds at once, Signature Bank was the second victim of a bank run.

Both banks were shut down by regulators. The Federal Deposit Insurance Corporation (FDIC) then created bridge banks so that depositors could access their funds as quickly as possible. Over the past few days, the FDIC has attempted to sell the assets and find potential buyers.

The Federal Deposit Insurance Corporation (FDIC) has entered into an agreement to purchase and assume substantially all of the deposits and certain loan portfolios of Signature Bridge Bank, National Association, by Flagstar Bank, the FDIC said in a release this weekend.

Signature Bank was a smaller financial institution than Silicon Valley Bank. As of December 31, 2022, Signature Bank had total assets of $110.4 billion and total deposits of $82.6 billion. The bank primarily served corporate clients, such as real estate companies, law firms, and cryptocurrency companies.

So what does Flagstar Bank get? Today’s transaction included the purchase of approximately $38.4 billion of assets from Signature Bridge Bank, NA, including $12.9 billion in loans purchased at a discount of $2.7 billion. dollars, the FDIC said. In the coming days, the 40 branches of Signature Bank will also be rebranded as Flagstar Bank.

The FDIC retains a significant portion of Signature Banks’ assets, about $60 billion in loans, bonds and other assets. If the agency does not find a buyer, it will keep these assets for the time being.

Flagstar Bank has also confirmed that the transaction does not include any digital assets, crypto-related assets or deposits. In particular, many crypto companies relied on Signet, a payment system that operated 24/7 and was used by crypto companies for on and off-ramps. Bookmark is not part of the Agreement.

This part of Signature Bank was probably the most unstable part of the financial company. While the FDIC has been successful in finding a buyer for many of Signature Banks’ businesses, Bloomberg reports that crypto-related deposits will be returned directly to customers. Other crypto assets are still on sale.

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