The non-digital deposits and some loans of Signature Bank have been sold to Michigan-based Flagstar Bank just one week following the bank’s collapse.
According to a press release, the purchase agreement was made valid by the Federal Deposit Insurance Corporation (FDIC). Based on the agreement, Signature’s former 40 branches will resume operations on Monday under Flagstar’s ownership.
Users have been encouraged to continue utilizing older Signature bank locations until they are informed that complete banking services are available at Flagstar’s branches.
Consequently, customers of Signature Bank will instantly become Flagstar customers, according to the release. Additionally, the FDIC will be responsible for insuring customer deposits up to the $250,000 insurance cap. However, this will not be applicable to digital clients of the bank. All crypto customers’ deposits will be handled directly by the FDIC.
Furthermore, the transaction includes the purchase of Signature’s assets of about $38.4 billion and loans of $12.9 billion discounted at $2.7 billion. Markedly, Signature has about $110.36 billion in total assets and total deposits of approximately $88.59 billion as of December 31, 2022.
Saga Behind the Collapse of Signature Bank
When regulators shut down Signature Bank, it shocked the entire crypto and financial industry. According to different reports, customers of Signature Bank withdrew billions of dollars, forcing the bank to close following the collapse of Silicon Valley Bank (SVB).
Several businesses and people lost money as a result of these institutions’ abrupt failure, which had far-reaching effects. Crypto-based firms including Paxos, Coinbase, and Celsius all revealed exposures to the shuttered bank.
Subsequently, the US government quickly stepped in to reassure customers of the banks that their deposits will not be affected. The exceptional decision to safeguard both insured and uninsured funds was reached as a result of regulators’ conclusion that the failure of the two regional banks posed a serious risk to the entire U.S. banking system.
In general, the failure of Silicon Valley Bank and Signature Bank served as a warning to the banking sector. It brought home the need for strict regulation and oversight to stop such incidents from occurring in the future.
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