Flagstar Bank buys Signature’s assets without the cryptocurrency part of the business

$4 billion related to the crypto business will remain under the FDIC’s control

20.03.2023 - 11:30

516

3 min

What’s new? The US Federal Deposit Insurance Corporation (FDIC) sold the business of the previously closed Signature Bank, except for the cryptocurrency and digital assets part. Starting March 20, 40 branches of the bank will be taken over by Flagstar Bank, a subsidiary of New York Community Bancorp. As for the $4 billion that was not part of the deal, the FDIC plans to make the funds available directly to owners.

The FDIC’s press release

Details of the deal. Flagstar bought $38,4 billion worth of Signature’s assets, which includes $12,9 billion in loans that the bank bought at a discount of $2,7 billion. About $60 billion in loans will remain in the FDIC’s disposition. The agency estimated the cost of Signature Bank’s bankruptcy to its Deposit Insurance Fund at about $2,5 billion. The exact value will be determined after the FDIC completes its receivership.

Deposits and part of Signature’s loan portfolios that are not related to the crypto business will go to the new owner. In this, Signature’s former customers will automatically become Flagstar depositors, and their funds will be insured by the FDIC up to the insurance limit.

As of December 31, 2022, Signature had $88,6 billion in total deposits and $110,4 billion in total assets.

Signature situation. On March 12, the bank was taken over by the New York Department of Financial Services (NYDFS). According to the regulator, it was closed because of a significant crisis of confidence in its management. However, Signature board member Barney Frank believes the NYDFS closed the bank to demonstrate the toxicity of cryptocurrencies.

Santiment analysts record the rapid growth of the BTC network since the beginning of the year

The number of bitcoin addresses is increasing dramatically, despite the volatility of the crypto market

Read further

The FDIC later denied a Reuters report that Signature’s buyer would have to give up the bank’s crypto business. The bankruptcy proceeding will end after all of the bank’s assets are sold and claims against it are reviewed and the terms of the bid from the buyer are determined.

Author: