Following Signature Bank’s failure a week ago, New York Community Bank has agreed to purchase a sizable stake in the defunct lender for tri-state businesses for $2.7 billion.
Signature Bank had about $110 billion in assets when it failed last week, and New York Community Bank announced on Sunday that it had reached an agreement to purchase $38.4 billion of those assets from the FDIC.
It was announced by the FDIC that the remaining $60 billion in Signature Bank loans would remain in receivership until they could be sold.
Only 48 hours after the collapse of Silicon Valley Bank, which sent shock waves throughout the stock market, the Manhattan-based bank also failed. Signature Bank had recently branched out into the cryptocurrency industry, much like Silicon Valley Bank had done. Depositors were concerned about the future of Signature Bank after the California bank failed due to its heavy use of cryptocurrency and a large number of uninsured deposits.
Signature Shut Down Last Week
After a “similar systemic risk exception,” regulators last week shut down Signature, making it the third largest bank failure in US history, as stated in a joint statement from the US Treasury, the Federal Reserve, and the Federal Deposit Insurance Corporation released on Sunday. After New York City, Silicon Valley was the largest technology hub in the world.
The $2.5 billion loss to the deposit insurance fund due to Signature’s failure will be covered by fees assessed to banks.
On Monday, November 5, Signature Bank’s 40 locations will rebrand as Flagstar Bank, a wholly-owned subsidiary of New York Community Bank.
After Signature Bank failed last week, New York Governor Kathy Hochul has been assuring residents that the state’s banking system is safe.
When speaking to reporters in New York City last Monday, Hochul emphasized the importance of New Yorkers feeling confident about the safety of their financial assets. “Their money is safe no matter which bank they’ve selected.”