On Monday, about a week after the collapse of Signature Bank, the Federal Deposit Insurance Corporation (FDIC) announced that Flagstar Bank, a wholly owned subsidiary of New York Community Bancorp, purchased 40 former Signature branches and its assets. Flagstar took over almost all of Signature’s deposits, except for $4 billion in deposits related to the bank’s crypto banking business.
FDIC Expects $2.5B Loss Due to Signature Bank Failure, Extends Bid Window for Silicon Valley Bank
The FDIC has announced that Flagstar Bank, a subsidiary of New York Community Bancorp, has acquired the assets and bank branches of Signature Bank effective March 20, 2023. The branches will continue to operate during regular business hours. With the exception of depositors linked to the digital banking business, depositors in Signature Bank will automatically become depositors in Flagstar Bank.
Despite statements from the FDIC to the contrary, Flagstar acquired Signature Bank without acquiring the cryptocurrency business. Sources familiar with the sale had suggested that divestment of crypto activities was necessary, but the FDIC insisted last week that it would not be necessary. The New York State Department of Financial Services also publicly stated that Signature’s shutdown was unrelated to cryptocurrency, prior to the FDIC’s announcement. Former politician Barney Frank speculated that the shutdown of Signature was intended to convey an “anti-crypto” message.
The FDIC’s press release on Monday stated that Flagstar Bank will not take over any of Signature Bank’s cryptocurrency depositors or clients. “Flagstar Bank’s bid did not include approximately $4 billion in deposits related to the former Signature Bank’s digital banking business,” the FDIC announced. The agency also said it will give the deposits directly to customers linked to the digital banking business.
The FDIC’s announcement on Monday sparked a discussion on social media, with some speculating that a conspiracy theory had been proven true. Caitlin Long, Founder and CEO of Custodia Bank, tweeted on the news: “They actually kept away from the crypto deposits. Investigation time.” In addition to Flagstar not assuming Signature Bank’s cryptocurrency deposits, the FDIC also noted that the government expects losses.
The FDIC estimated the cost of Signature Bank’s deposit insurance fund failure to be about $2.5 billion, according to the agency’s announcement. “The exact cost will be determined when the FDIC closes the receivership.” In addition, the FDIC extended the bidding window for Silicon Valley Bank (SVB) on Monday. Bids for SVB’s private bank are due March 22, 2023, and bids for the bridge bank, Silicon Valley Bridge Bank, NA, are due two days later.
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Assets, Bank Acquisition, Banking Industry, Barney Frank, Bid Window, Bridge Banking, Business Operations, Caitlin Long, Conspiracy Theories, Crypto Business, Crypto Business Operators, Crypto Operations, Crypto Currency, Crypto Currency Operations, Custodia Bank, Customers, Depositors, Deposits, Digital Banking, Disposal, FDIC, Financial Regulation, Financial Services, Flagstar Bank, Governmental Entity, Losses, New York Community Bancorp, New York State Department of Financial Services, Private Bank, Receivables, Signature Bank, Silicon Valley Bank, Social Media
What are your thoughts on the FDIC’s decision not to include Signature Bank’s cryptocurrency deposits in its acquisition of Flagstar Bank? Share your opinion in the comments section below.
Jamie Redman
Jamie Redman is the news editor at Bitcoin.com News and a financial technology journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open source and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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