By: ABP News Bureau | Updated at : 20 Mar 2023 10:14 AM (IST)
The 40 branches of Signature Bank will be renamed to Flagstar Bank ( Image Source : Getty )
New York Community Bank has agreed to buy a significant chunk of the Signature Bank in a $2.7 billion deal after it became the third-largest US bank to fail since the 2008 crisis, according to the Federal Deposit Insurance Corp.
The 40 branches of Signature Bank will be named Flagstar Bank, which is one of New York Community Bank’s subsidiaries, reported news agency AP. It will include the purchase of $38.4 billion in Signature Bank’s assets, a little more than a third of Signature’s total since the bank failed a week ago.
The $60 billion in Signature Bank’s loans will remain in receivership and will get sold off in time, the FDIC said.
Signature Bank was the second bank to collapse, roughly 48 hours after the collapse of Silicon Valley Bank. The New York- based lender in the tristate area in recent years focused on cryptocurrencies as a potential growth business.
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After Silicon Valley Bank failed, depositors were jittery about Signature Bank’s health owing to its high amount of uninsured deposits apart from its exposure to crypto and other tech-focused lendings. By the time it was closed by regulators, Signature was the third largest bank failure in US history.
The FDIC expects Signature Bank’s failure to cost the deposit insurance fund $2.5 billion, but it is subject to change as the regulator sells off assets. The deposit insurance fund is paid for by assessments on banks and taxpayers do not bear the direct cost when a bank fails.
The global financial giant Credit Suisse which also triggered concerns of collapse has been rescued by UBS for 3 billion Swiss Francs ($3.23 billion), reported news agency Reuters. After the SVB collapse, the country’s 14th largest bank First Republic Bank, which was on the verge of failing was also rescued by eleven of America’s biggest banks.
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