New York Community Bank (NYCB) has agreed to purchase a significant portion of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corporation (FDIC) announced late Sunday.
The FDIC said the deal will include NYCB purchasing $38.4 billion in the New York-based Signature Bank’s assets, which is about a third of Signature’s $110 billion that the bank had before it failed last week.
The bank will also rename 40 branches of Signature Bank to Flagstar Bank, starting Monday. Flagstar is one of New York Community Bank’s subsidiaries.
About $60 billion in Signature Bank’s loans will remain in receivership, the FDIC said. These remaining loans are expected to be sold off at a later time.
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Silicon Valley Bank (SVB) collapsed on Friday and roughly 48 hours later, Signature Bank failed as well. SVB’s collapse was the second-largest in U.S. history behind Washington Mutual’s collapse in 2008.
Signature Bank’s collapse on Sunday was the third-largest bank failure in U.S. history.
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Regulators said all depositors and their money at the failed institutions, Silicon Valley Bank and Signature Bank, would remain protected even with figures over the $250,000 federal insurance. They have also taken other actions to shore up confidence and try to prevent a domino effect in this banking crisis.
Signature Bank was a large commercial lender in the tri-state area, and recently expanded its assets to include cryptocurrencies.
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The prevalence of uninsured deposits as well as this exposure to crypto and tech-focused lending worried depositors and ultimately caused its collapse.
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The FDIC said taxpayers will not bear the direct cost of Signature Bank’s failure. The estimated cost of the deposit insurance fund is expected to be $2.5 billion, but that figure may change as the regulator sells off assets.
The Associated Press contributed to this report.