New York Community Bancorp Subsidiary Takes Over Signature Bank Excluding Crypto Deposits: FDIC

Following a week of uncertainty after the collapse of Signature Bank, the US regulators have struck a deal with a subsidiary of New York Community Bancorp that will see the latter take over most of the deposits and loans of the failed lender.

Flagstar Bank would assume ‘substantially all’ of the Signature Bank’s deposits, part of its loan portfolios, and operations in 40 branches, according to a statement by the Federal Deposit Insurance Corporation released late Sunday.

The Michigan-based financial institution would reportedly buy $12.9 billion of Signature’s loans at a steep discount of $2.7 billion. The lender’s cryptocurrency business, once one of its fastest-growing divisions, is not included in the deal.

“Flagstar Bank’s bid did not include approximately $4 billion of deposits related to the former Signature Bank’s digital banking business. The FDIC will provide these deposits to customers whose accounts are associated with the digital banking business,” FDIC said.

Signature Bank’s digital asset division is down 80% from last year

Signature-operated Signet is a special platform dedicated to the buying and selling of digital assets. In the past year, per a report by the Financial Times, that division dipped from a high of $30 billion to $4 billion, thanks to crypto winter.

FDIC took over Signature Bank as the receiver after the New York State Department of Financial Services shuttered its operations in a week that saw two other lenders, Silicon Valley Bank and Silvergate Bank, close shop.

An estimated $60 billion worth of Signature loans would remain with FDIC for later disposition, besides equity appreciation rights in NYCB common stock with a potential value of $300 million, says the commission. The cost of winding down Signature charged to the Deposit Insurance Fund is $2.5 billion.

Meanwhile, cryptocurrencies started the week on a bullish momentum, with bitcoin trading at $27,583 as at press time, representing a change of -1% in the past day and 14% in the last week, according to data from CoinMarketCap. At the same time, the top altcoin Ether is up 5% at $1,754.