By The Associated Press via
NBC News
New York Community Bank will acquire a significant portion of Signature Bank, which went bankrupt two weeks ago, for $2.7 billion, the Federal Deposit Insurance Corp (FDIC) reported Sunday night, in an effort to the US authorities for tackling the fear of a financial crisis and consolidating the banking system.
The deal will include the purchase of $38.4 billion in Signature Bank assets, just over a third of Signature's total when the bank failed a week ago.
Starting this Monday, all 40 Signature Bank branches will be renamed Flagstar Bank, one of the subsidiaries of New York Community Bank.
A Signature Bank office in New York, on March 13, 2023. Spencer Platt / Getty Images
The FDIC said about $60 billion in Signature Bank loans will remain in receivership, but it expects they will be sold over time.
New York-based Signature Bank was the second bank to fail in this banking crisis, following the collapse of Silicon Valley Bank.
It was a large commercial lender in the tri-state area, but in recent years had gotten into cryptocurrency as a business with potential growth.
[Are your savings safe in the bank? This is how the crisis due to the bankruptcy of Silicon Valley Bank and Signature Bank can affect you]
Following the Silicon Valley Bank failure, depositors became nervous about Signature Bank's strength due to its high number of uninsured deposits, as well as its exposure to cryptocurrencies and other technology-focused lending.
Its collapse has become the third largest collapse in US history.
The FDIC estimates that Signature Bank's failure will cost the deposit insurance fund about $2.5 billion, though that figure may change as the regulator sells off assets.
The deposit insurance fund is financed with bank fees, which excludes taxpayers from having to assume the direct cost of the end of a bank.
Faced with the collapse of both banks in less than 48 hours, President Joe Biden guaranteed that the US banking system "is safe" and that citizens' money "will be there when they need it."
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He also announced the dismissal of the leadership of both entities and the opening of an investigation to determine what actions led to bankruptcy.
“I am firmly committed to holding those responsible for this disaster fully accountable and to continue our efforts to strengthen supervision and regulation of the largest banks so that we do not find ourselves in this situation again,” he declared.
A week after the collapse of Silicon Valley Bank and Signature Bank, Swiss bank Credit Suisse fell, raising more fears of contagion and causing losses across all markets.
Swiss regulators announced an agreement on Sunday for bank USB to buy Credit Suisse for $3.2 billion, a deal they hope will serve as a firewall and end instability in the Swiss banking system.