FDIC sells most of failed Signature Bank to Flagstar
Source: CNN Business
Published 9:32 PM EDT, Sun March 19, 2023
New York CNN A week after Signature Bank failed, the Federal Deposit Insurance Corporation said it has sold most of its deposits to Flagstar Bank, a subsidiary of New York Community Bank. On Monday, Signature Banks 40 branches will begin operating as Flagstar Bank. Signature customers wont need to make any changes to do their banking Monday.
New York Community Bank bought substantially all of Signatures deposits and a total of $38.4 billion worth of the companys assets. That includes $12.9 billion of Signatures loans, which New York Community Bank purchased at a steep discount - it paid just $2.7 billion for them. New York Community Bank also paid the FDIC stock that could be worth up to $300 million.
At the end of last year, Signature had more than $110 billion worth of assets, including $88.6 billion of deposits, showing how the run against the bank two weeks ago led to a massive decline in deposits. Not included in the transaction is about $60 billion in other assets, which will remain in the FDICs receivership. It also doesnt include $4 billion in deposits from Signatures digital bank business.
As the banking crisis spreads, banks have grown increasingly wary of taking on risk. Thats likely why New York Community Bank was unwilling to take on all Signatures assets.
Read more: https://www.cnn.com/2023/03/19/investing/fdic-signature-bank-assets-flagstar-hnk-intl/index.html
Delphinus
(11,830 posts)Years ago, Wells Fargo banks in Indiana were sold to Flagstar and I'm really not sure why. It wasn't a seamless transition, but I've stayed with them for close to six years (I think).
I wish I had a better handle on all this.
BumRushDaShow
(128,767 posts)after Wells Fargo bought Wachovia (that had previously bought/merged-with First Union, that had previously bought Corestates, that had itself bought a bunch of local banks including my own original one - First Pennsylvania, that had been around since the 1700s), they were required to shed some of the Wachovia branches - many ending up being sold to Sovereign Bank, later bought by and re-named to Santander.
So those gobble ups often mean selling off some assets.
OnlinePoker
(5,719 posts)At the time, they were going through a lot of legal issues dealing with their fake accounts scandal. They ended up paying $3.7 billion as a fine. One senior banker is possibly on her way to jail over that illegal activity.
Delphinus
(11,830 posts)I had forgotten why they switched me.