Flagstar buys Signature Bank deposits from FDIC

Signature Bank’s deposits and loans are scheduled to be sold to Flagstar Bank, a subsidiary of New York Community Bancorp, just one week following the bank’s failure; however, crypto-related deposits will not be included in the sale.

The United States Federal Deposit Insurance Corporation (FDIC) announced the arrangement on March 19. Under the terms of the “buy and assumption agreement,” the Michigan-based bank would assume $38.4 billion in non-cryptocurrency-related deposits and $12.9 billion in loans.

40 branches of Signature’s Bank will begin functioning as Flagstar Bank on March 20, and all deposits assumed by Flagstar Bank will continue to be insured up to the $250,000 maximum.

The acquisition from Flagstar Bank did not include the nearly $4 billion in deposits held by the digital assets segment of Signature Bank. Instead, the FDIC stated it will transfer these deposits straight to consumers who created 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 value represents 4.5% of Signature Bank’s total of $88.6 billion in deposits as of December 31.

Three crypto businesses, Coinbase, Celsius, and Paxos, have disclosed having exposure to Signature Bank.

As part of a prospective rescue plan, Reuters reported on March 17 that two sources indicated that any buyer of Signature would be compelled to relinquish crypto operations.

At the time, an FDIC spokeswoman rejected this, stating that the organization does not require crypto divestiture as a condition of any transaction.

Nic Carter, a partner at Castle Island Ventures, feels the recent disclosure demonstrates that the FDIC “lied” in its answer to Reuters.

Signature Bridge Bank was founded by the FDIC on March 12, after the New York Department of Financial Services (NYDFS) shuttered the bank and assigned the FDIC as its receiver. The takeover follows the FDIC’s creation of Signature Bridge Bank.