Signature Bank Sold to Arm of New York Community Bancorp

One week after being taken over by regulators, Signature Bank has a new owner.

The Federal Deposit Insurance Corp. (FDIC), which assumed control of the failed bank on March 12, announced Sunday (March 19) that it had reached an agreement in which Flagstar Bank, a subsidiary of New York Community Bancorp, would purchase Signature.

“Today’s transaction included the purchase of about $38.4 billion of Signature Bridge Bank, N.A.’s assets, including loans of $12.9 billion purchased at a discount of $2.7 billion,” the FDIC said in news release, referring to the bank it created after placing Signature into receivership.

“The FDIC estimates the cost of the failure of Signature Bank to its Deposit Insurance Fund to be approximately $2.5 billion,” the release said. The exact cost will be determined when the FDIC terminates the receivership.

The agency adds that Signature Bank’s 40 branches will operate under Flagstar’s ownership beginning Monday (March 20).

The FDIC notes that Flagstar’s bid did not include $4 billion related to Signature’s digital banking business, and that the agency “provide these deposits directly to customers whose accounts are associated with the digital banking business.”

Another $60 billion in loans will remain in receivership, the FDIC said.

Signature’s collapse last week came two days the high-profile failure of Silicon Valley Bank (SVB), and days after another bank, Silvergate, announced it was self-liquidating.

The FDIC took over closed SVB and seized its deposits in the second largest bank failure in American history, and the largest since the financial crisis of 2008, after the bank suffered a run on deposits after reports that it was struggling.

Silvergate, meanwhile, announced March 8 it could no longer stay in business, hours after reports it had said in a regulatory filing it had questions about its future as a “going concern.”

As PYMNTS noted last week, the downfall of Signature and Silvergate has significant ramifications for the world of cryptocurrency.

“Almost all of the household names in crypto and many smaller firms relied on Silvergate and Signature as their primary on-ramps to the traditional banking sector,” PYMNTS wrote.

“Now, without those banking partners, crypto companies are scrambling for new ways to work with fiat currency and accept dollar deposits in return for services or in exchange for tokens.”

For years, Silvergate’s Silvergate Exchange Network (SEN) and Signature Bank’s Signet platforms were indispensable to the crypto industry, allowing round-the-clock real-time payments outside of traditional banking hours and without the need for more traditional and comparatively restricted payments services such as the Federal Reserve’s Fedwire or ACH transfers.