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 takeover agreement with US regulators for some of Signature Bank’s assets and loans. Earlier this month, after all of Silicon Valley Bank’s customers tried to withdraw their money at the same time, Signature Bank was the second victim of a bank run.

Both banks were closed by regulators. The Federal Deposit Insurance Corporation (FDIC) then established bridge banks so that depositors could access their money as quickly as possible. Over the past few days, the FDIC has been trying to sell the assets and find potential buyers.

“The Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement for substantially all of the deposits and certain loan portfolios of Signature Bridge Bank, National Association, of Flagstar Bank,” the FDIC said in a statement this weekend.

Signature Bank was a smaller financial institution than Silicon Valley Bank. As of December 31, 2022, Signature Bank had $110.4 billion in total assets and $82.6 billion in total deposits. The bank mostly 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 Signature Bridge Bank, NA’s assets, including $12.9 billion in loans purchased at a discount of $2.7 billion,” the FDIC said. In the coming days, the 40 branches of Signature Bank will also be renamed as Flagstar Bank branches.

The FDIC retains a significant portion of Signature Bank’s assets – approximately $60 billion in loans, bonds and other assets. If the agency can’t find a buyer, it will just hold those assets until further notice.

Flagstar Bank also confirmed that the transaction does not include any digital assets, crypto-related assets or deposits. In particular, many crypto firms relied on Signet, a payment system that worked 24/7 and was used by crypto companies for entry and exit. The signet is not part of the agreement.

That part of Signature Bank was probably the most volatile part of the financial firm. While the FDIC was able to find a buyer for many of Signature Bank’s activities, Bloomberg says crypto-related deposits will be returned directly to customers. Other cryptoassets are still up for sale.