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Flagstar Bank of New York Community Bancorp. agreed to buy now closed Signature Bank’s (NASDAQ:SBNY) deposits and some of its loans.
All 40 former Signature Bank branches will operate under New York Community Bancorp’s Flagstar Bank as of Monday, the Federal Deposit Insurance Corporation said in a statement Sunday night.
The New York State Department of Financial Services took possession of Signature Bank (SBNY) last Sunday to protect depositors. The Flagstar Bank purchase comes after a Financial Times report on Friday indicated that the FDIC is open to discussing losses from failed lenders Silicon Valley Bank (SIVB) and Signature Bank (SBNY).
The deal included the purchase of approximately $38.4 billion of Signature Bridge Bank’s North American assets, including loans of $12.9 billion purchased at a discount of $2.7 billion. Approximately $60 billion in loans will remain in receivership for later disposition by the FDIC. In addition, the FDIC received capital appreciation rights in New York Community Bancorp, Inc. common stock with a potential value of up to $300 million.
Flagstar Bank’s offer did not include about $4 billion in deposits related to the former Signature Bank’s digital banking business. The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business.
The FDIC estimates that the cost of Signature Bank’s failure to its Deposit Insurance Fund is approximately $2.5 billion. The exact cost will be determined when the FDIC completes the receivership.
Bloomberg reported the news of Flagstar Bank’s possible purchase of Signature Bank’s deposits the previous Sunday.
The Community Bank of New York (NYSE:NYCB) The report also comes after Bloomberg reported on Sunday that Federal Deposit Insurance Corp. is moving towards a breakup of Silicon Valley Bank after he was unable to find a suitor for the entire company.
Bloomberg reported Saturday that billionaire investor Warren Buffett has been in contact with top Biden administration officials in recent days regarding the regional banking crisis.
