Signature Bank to return crypto deposits to customers directly
On March 20, 2023, the Federal Deposit Insurance Corp. announced that Signature Bank’s related deposits would be returned directly to the customers, contrary to the notion that the New York Community Bancorp would handle them.
The Federal Deposit Insurance Corp. said that Signature’s digital-assets business and customer deposits amounting to around $4 billion is not part of Flagstar Bank’s bid for Signature Bank. Depositors were urged to direct their questions by phone.
The takeover agreement stated that Flagstar Bank would take control of selected loan portfolios and all deposits from Signature Bank after its grand fall after the Silicon Valley bank collapse. FDIC was appointed as the receiver of the fallen bank by the New York State Department of Financial Services after its closure.
Signature’s 40 branches will run as Flagstar locations from March 21. Signature users will continue using their current branches until Flagstar Bank notifies them of available full-banking services from the same bank.
All deposits adopted by Flagstar Bank will be insured by the FDIC as usual, up to the insurance limit.
FDIC is leaving behind Signature’s real-time payments network, Signet, and will be subject to arrangement later.
Signature Bank, which went under after the SVB collapse, is the third-largest bank failure in US history, with a deposit of $88.6 billion and more than $110 billion in assets by December 2022. The Federal Deposit Insurance Corporation (FDIC) announced on Sunday that the fallen bank would be under the new management of New York Community Bancorp.
The FDIC agreed to transfer ‘substantially all deposits and select loan portfolios of Signature Bridge Bank, National Association, by Flagstar Bank, National Association, Hicksville, New York, a wholly owned subsidiary of New York Community Bancorp, Inc., Westbury, New York.’ The FDIC created the Signature Bridge Bank to assume control over Signature Bank’s operations after the New York state regulators closed the bank.
New York Community Bancorp is the 24th-largest regional bank in the US after acquiring Flagstar in December 2022.
The recent collapse of banks such as Signature Bank and Silicon Valley Bank has caused fear among investors and major account holders in the US TradFi scene. The collapse has made it challenging for investors and crypto platforms to transfer fiat currency.
However, the federal government has intervened by attempting to pay back the depositors and broker the failed institutions into functional ones.
The FDIC has roughly evaluated that the overall cost of Signature Bank’s failure is approximately $2.5 billion to its Deposit Insurance Fund. The corporation will determine the exact figure after successfully conducting the receivership.
