Only a week after its collapse, Signature Bank’s deposits and loans are set to be sold to Flagstar Bank, a subsidiary of New York Community Bancorp — crypto-related deposits however, will not be part of the deal.
The United States Federal Deposit Insurance Corporation (FDIC) announced the agreement on March 19, which will see $38.4 billion worth of non-cryptocurrency-related deposits and $12.9 billion in loans taken over by the Michigan-based bank under a “purchase and assumption agreement.”
From March 20, Signature’s Bank 40 branches will begin operating as Flagstar Bank, where all deposits assumed by Flagstar Bank will continue to be insured up until the $250,000 insurance limit.
Today, we entered into an agreement with a subsidiary of New York Community Bancorp, Inc., to purchase and assume deposits and assets out of Signature Bridge Bank. Read more ➡️ https://t.co/bSshY93lBh. pic.twitter.com/b9RBvYtGF7
— FDIC (@FDICgov) March 19, 2023
The takeover deal from Flagstar Bank did not include approximately $4 billion of deposits held by Signature Bank’s digital assets business. Instead, the FDIC confirmed that it would transfer these deposits directly to customers who opened a digital banking account, stating:
“The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business.”
The $4 billion figure amounts to 4.5% of the total $88.6 billion deposits that Signature Bank had as of Dec. 31.
Coinbase, Celsius and Paxos are three crypto firms that recently confirmed having some exposure to Signature Bank.
Last week, a March 17 report from Reuters cited two sources who suggested that any buyer of Signature would be required to divest crypto activities as part of a potential rescue plan.
At the time, an FDIC spokesperson denied this, noting that the agency did not require crypto divestment as part of any sale.
However, Castle Island Ventures partner Nic Carter believes the latest announcement shows that the FDIC “lied” in its response to Reuters.
Wow. Wow. the FDIC lied and Reuters was correct. I’m shocked. Shocked I tell you. This is the same FDIC chair who presided over Choke Point 1.0 by the way. pic.twitter.com/CHu8MgSW4X
— nic carter (@nic__carter) March 20, 2023
The takeover comes after Signature Bridge Bank was created by the FDIC on March 12 after the New York Department of Financial Services (NYDFS) closed the bank and appointed the FDIC as its receiver.